Fixed Deposits · 3 year
3-Year Fixed Deposits
3-year FDs offer slightly higher rates than 1-year tenure plus more compounding. Typical use: medium-term savings goals (vacation, down payment, child fees) where you have 3-year visibility on when you'll need the money. Top rates 7.0-8.0% for general, +0.5-0.75% for seniors.
Who needs this
Investors with a 3-year known-need (down payment, education fee, planned purchase) wanting capital safety. Risk-averse investors who don't want NAV fluctuations. Senior citizens locking medium-term cashflow.
At a glance
Top rate (general)
8.0%
Small finance bank rates
PSU bank range
6.75-7.25%
SBI, PNB, BoB, Canara
Private bank range
7.0-7.75%
HDFC, ICICI, Axis, Kotak
Senior bonus
+0.5-0.75%
Standard across most banks
Compounding
Quarterly
RBI rule for scheduled banks
DICGC cover
₹5 lakh
Per depositor per bank
Top banks — 3 year
Source: bank rate cards · verified FY26 Q1
| Bank | Type | General % | Senior % |
|---|---|---|---|
Unity Small Finance Bank | SFB | 8.00% | 8.50% |
AU Small Finance Bank | SFB | 7.85% | 8.60% |
IDFC First Bank | Private | 7.50% | 8.00% |
Yes Bank | Private | 7.50% | 8.00% |
Bank of Baroda | PSU | 7.15% | 7.65% |
SBI | PSU | 6.80% | 7.50% |
Key decisions
3-year FD or 5-year tax-saver FD?
If you want 80C deduction, the 5-year tax-saver is the only FD option (3-year is NOT 80C-eligible). If you don't need 80C, 3-year is more liquid — no mandatory 5-year lock and you can break with penalty. Same DICGC cover, similar rates.
3-year FD vs debt mutual fund?
Post-Apr-2023, both are slab-taxed on gains. FD is fixed + DICGC-insured + locked rate; debt MF is variable + NAV-fluctuates + can be redeemed anytime (subject to 1% exit load if <1 year). For 3 years, FD usually wins on certainty unless RBI is in a clear rate-cut cycle.
Cumulative vs payout FD — which is better?
Cumulative (reinvest interest): better total return because interest compounds. Use when you don't need cash flow. Payout (monthly/quarterly): lower total return but gives regular income — useful for retirees relying on FD interest as monthly income.
Related articles
Useful calculators
Regulatory notes — RBI / DICGC / IT Act
- Bank FDs are regulated by RBI; DICGC insurance covers up to ₹5 lakh per depositor per bank.
- Quarterly compounding mandated by RBI for scheduled commercial banks.
- 3-year FD is NOT eligible for Section 80C deduction. Only the 5-year tax-saver FD is.
- Premature withdrawal: 0.5-1% penalty on the contracted rate (bank-specific).