FD Rates Up 5-25 bps: What Extra You Earn on ₹1 Lakh to ₹10 Lakh Deposits

A fixed deposit (FD) rate rise of 5 to 25 basis points can put extra money in your pocket. That's according to reporting by The Economic Times. On deposits of ₹1 lakh to ₹10 lakh, the gain is real but small.

In rupees, 25 basis points on ₹10 lakh adds about ₹2,500 a year. On ₹1 lakh, it adds about ₹250. The table below shows the numbers for other amounts.

Key takeaways

• A basis point (bps) is one-hundredth of a percent. So 25 bps is 0.25%.
• On ₹1 lakh, a 5-25 bps gain adds roughly ₹50 to ₹250 a year.
• On ₹10 lakh, the same gain adds roughly ₹500 to ₹2,500 a year.
• Bigger deposits and longer terms make the gain larger.
• Compare rates when you open or renew, but don't break an old FD for this.

How basis points work on an FD

Banks quote FD rates in percent a year. When a rate changes, the move is usually small. That's why people talk in basis points.

One basis point is 0.01%. So 5 bps is 0.05%. And 25 bps is 0.25%. A bank that offers 7.00% and one that offers 7.25% are 25 bps apart.

This gap may look tiny. But it's paid on your whole deposit, every year, until the FD matures.

What the extra amount looks like in rupees

Here's a simple way to see it. Multiply your deposit by the extra rate. For a one-year FD, that gives the extra interest.

Take ₹5 lakh and a 25 bps gain. That's ₹5,00,000 × 0.25% = ₹1,250 extra in a year. Compounding adds a few rupees more. We've left it out to keep things clear.

Deposit	Extra at 5 bps	Extra at 10 bps	Extra at 25 bps
₹1 lakh	₹50	₹100	₹250
₹3 lakh	₹150	₹300	₹750
₹5 lakh	₹250	₹500	₹1,250
₹10 lakh	₹500	₹1,000	₹2,500

These are approximate yearly figures for a one-year term, before tax. For a three-year FD, the gain roughly triples. The exact payout depends on your bank's compounding.

Who is affected

New depositors gain the most. If you're opening an FD today, you can lock in the higher rate right away.

People with FDs maturing soon are also in the picture. When your FD ends, you can renew at the current rate. Check that rate before you say yes.

Senior citizens often get an extra rate from banks on top of the usual one. So their gain on the same deposit can be a bit higher. Savers with older, running FDs don't get the new rate. Their rate stays fixed until maturity.

If your income is taxable, remember that FD interest is added to your income. The extra amount is taxed too.

What to do now

You don't need to rush. A few simple checks are enough.

1. Note when your current FDs mature.
2. Look at rates for the same term at two or three banks. Our interest rate tables can help.
3. Compare the rupee gain, not just the percent.
4. Keep each bank's deposit within the ₹5 lakh insurance cover where you can.
5. Don't break an old FD unless the gain beats the penalty.

The cover limit comes from DICGC, which insures bank deposits up to ₹5 lakh per depositor, per bank. It's worth knowing when you spread ₹10 lakh across banks. For more rate stories, visit our news hub.

Frequently asked questions

How much extra will I earn on ₹1 lakh if the rate rises 25 bps?

You'll earn about ₹250 more in a year. That's ₹1,00,000 × 0.25%. Compounding adds a few rupees.

Does the new rate apply to my existing FD?

Usually, no. An FD keeps the rate it was booked at until maturity. A new rate applies to fresh or renewed deposits.

Is the extra FD interest taxed?

Yes. FD interest is added to your income and taxed at your slab rate. The banks may also cut tax at source once interest crosses a set limit.