FD rates touch 8.60%: Why splitting ₹10 lakh across deposits may be smarter than one big FD

Fixed deposit rates of up to 8.60% are attracting investors seeking predictable returns, but putting all their savings into a single deposit may limit financial flexibility. FD laddering, which involves spreading investments across different maturities, can help balance interest income, liquidity and reinvestment risk.

With banks offering competitive fixed deposit (FD) rates across tenures ranging from 444 days to five years, investors face an important question: should they lock their entire savings into the highest-paying deposit or divide the money across multiple FDs?

For someone investing ₹10 lakh, an FD ladder can provide staggered access to funds without requiring the premature closure of one large deposit.

What is FD laddering?

FD laddering involves dividing an investment into several deposits with different maturity dates.

FD laddering vs one large fixed deposit

For instance, an investor could split ₹10 lakh into four deposits of ₹2.5 lakh each, maturing after approximately 444 days, 555 days, three years and five years.

As each deposit matures, the investor can withdraw the money for planned expenses or reinvest it at prevailing interest rates.

This approach reduces dependence on a single maturity date and provides opportunities to respond to changing interest rates.

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How can you split ₹10 lakh?

The allocation is illustrative, not a recommendation to select particular banks.

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Where are FD rates highest?

According to the November 12 rate comparison from Stable Money, small finance banks continue to offer some of the most competitive deposit rates.

Suryoday Small Finance Bank offers up to 8.25% annually to regular customers and 8.60% to senior citizens on five-year FDs. Ujjivan Small Finance Bank offers up to 8.10% and 8.60%, respectively, on select tenures.

Meanwhile, Bank of Baroda has raised its highest regular depositor rate from 6.75% to 6.85%, with senior citizens eligible for up to 7.35%. Indian Overseas Bank offers 6.75% to regular depositors and 7.25% to seniors on its 444-day FD.

Highest FD interest rates across select banks

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