HDFC Bank fixed deposit interest rate

HDFC Bank publishes nineteen tenure buckets for deposits under ₹3 crore, and the rate does not climb steadily across them. It pays 2.75% at seven days, 6.25% at one year, peaks at 6.50% between three years and one day and four years seven months, and then falls back to 6.40% for the rest of the five-year range.

A five-year deposit therefore pays less than a three-and-a-half-year one at the same bank on the same day. Locking money away for longer is not rewarded past the peak — it is penalised. Anyone laddering deposits should be reading the bucket boundaries rather than picking round numbers.

The boundaries are sharp. At 15 months the rate is 6.35%; at 18 months it is 6.45%. Three months of extra tenure buys a tenth of a point. Our own table previously recorded this bank’s best tenure as 15 to 21 months, which the bank’s published grid shows to be wrong, and we have corrected it.

Across most of the grid the senior-citizen premium is a flat half point. In the peak bucket it is 0.60 — 7.10% against 6.50% — which is the widest premium HDFC Bank offers on the retail grid.

That makes the three-year-plus bucket doubly attractive for an eligible depositor: it is both the highest general rate and the largest premium. Defaulting to a one-year deposit at 6.75% senior gives up 0.35 points against the same money placed in the peak bucket.

Worth noting for comparison: Kotak Mahindra Bank pays 7.30% to seniors on a 6.50% general rate, a 0.80 point premium and the widest among the large banks we track. If the deposit is specifically for a senior citizen, the ranking of the large banks changes.

The usual case for accepting 6.50% instead of 8.00% is that a large bank is safer. Below ₹5 lakh that reasoning does not hold. The DICGC insures ₹5 lakh per depositor per bank, principal and interest combined, and the cover does not vary with the size of the institution.

So on a ₹5 lakh deposit the statutory protection at Shivalik Small Finance Bank is identical to the protection at HDFC Bank, and the small finance bank pays ₹52,764 more over five years. Split across two such banks, ₹10 lakh stays fully insured.

Above the cap the calculation genuinely changes, because you become an unsecured creditor and the balance sheet behind you is what matters. That is a legitimate reason to prefer a large bank for a large deposit — and not a reason to prefer one for ₹5 lakh.

Fixed deposit interest is taxed at your slab rate and taxed as it accrues, not when the deposit matures. A five-year deposit creates a liability in each of those five years whether or not any money has reached you.

At the 30% slab a 6.50% deposit returns 4.55% after tax. At the 20% slab, 5.20%. The tax deduction is larger than the entire 1.50 point gap to the best-paying bank in our table, which is worth holding in mind before optimising hard on the rate.

TDS is deducted where interest crosses the statutory threshold, but TDS is a payment on account and not the final tax. If your slab is higher you owe the balance; if it is lower or nil you reclaim it, and Form 15G or 15H prevents the deduction in the first place for those eligible. Treating TDS as the final liability is the most common mistake people make with deposit income.