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Best Fixed Deposits for six months

Know the Fixed Deposits that give the highest interest rate on their 6-month FD.

Have a recurring deposit (RD) recently matured and you have no idea what to do with it? Or, you received a lump sum amount from one of your family members?

While there are many things that you could buy with the money, you are looking for the right way to spend your money. With no financial goal in sight, keeping this money safely and securely is possibly the best way to go forward.

Also, you are not sure whether you will need this money in two months or two years. In this a no clear time horizon, you may not want to lock your money for a very long time. In this scenario, fixed deposits (FD) is the best option to park your time until it is required. If one year looks very far, you can park your funds in a six month FD.

Deciding the tenure of the fixed deposits is the next step that you need to decide. With

Typically, banks give a higher interest rate for Fixed Deposits that mature in a few days more than 6 months. E.g., Axis Bank gives 5.75% interest on FDs maturing in 6 months, while FDs maturing above 6 months and 7 months give an interest rate of 6.25%. Hence, it is better to opt for an FD that matures after 6 months, then a term deposit that matures in exactly 6 months.

You can open a six month FD online through your bank’s website. Most banks offer both short term and long term FDs. Banks give different interest rate on their FDs. The interest rate of 6 month FD of the top banks falls between 6.00% to 6.80%.

In the case of the top banks, private sector banks give a higher interest rate than public banks. Also, a fixed deposit with a premature withdrawal facility carries a lesser interest rate than FD without premature withdrawal.   

Here is the 6 month FD interest rate given by the top banks:

Bank Tenure Interest Rate
Kotak Mahindra Bank 180 Days 6.25%
ICICI bank (with premature withdrawal ) 121 days to 184 days 5.5
ICICI Bank (without premature withdrawal) 185 days to 210 days 6.25%
HDFC Bank 6 months 1 day- 9 months 6.25%
SBI 180 days to 210 days 5.8%
Bandhan Bank 6 months to less than 1 year 6.80%
RBL Bank   181 days to 240 days 6.75%
BoB 181 days to 270 days 6%
Yes bank 6 months to < 9 months 6.85%
Axis Bank 6 months < 7 months 6.25%

Currently, Yes Bank gives the highest interest rate on their 6 months fixed deposits. The lowest interest rate on 6-month term deposit of 5.8% is given by the country’s largest lender.

Let’s see how much difference will it make if choose over another. Let us assume that you have a principal of Rs.50,000 which you would want to park for 6 months. Using an FD calculator, we see that parking your deposit in SBI would increase your corpus to Rs. 51,467. In case of Yes Bank, your principal will grow to Rs. 51,737. The interest difference between the two banks is Rs.270.

Hence, we see that FD interest in six-month term deposit does not make a lot of difference. The main reason behind the not-so-significant difference is due to its short term horizon. The larger the corpus and higher the term horizon, the sharper will be the difference.

Conclusion: Go for the highest interest rate if the principal amount is very high. This will make sure that you earn high interest on your principal. If not, you can open an FD online through your bank’s internet banking or mobile app. After maturity, the amount will be credited to your account.     

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