Short-Term FDs Near 7.5%: Is Your Money Working?

Banks are offering attractive interest rates on short-term deposits right now. If your money is sitting idle in a savings account earning 3%, you could be earning over twice that by shifting to a short-term FD or liquid fund.

Here's what happened: Short-term interest rates in India have softened recently, making it cheaper for companies and banks to borrow for 3–12 months.. Banks are competing for short-term deposits, pushing up FD rates for 6–12 month tenures to attract retail savers alongside corporate borrowers.. Liquid mutual funds and money market funds are also seeing stronger yields as underlying rates in the short-term debt market pick up..

What you should do: Log in to your bank app today and compare FD rates for 6-month and 1-year tenures — many banks are offering 7%–7.5% right now.. Move idle savings account money (above your 3-month emergency buffer) into a short-term FD or liquid mutual fund to earn 2x the savings account rate.. If you have a lump sum you won't need for 6–12 months — bonus, advance salary, or windfall — lock it into an FD before rates soften further..

Small finance banks like AU, Ujjivan, and ESAF routinely offer 0.5%–1% higher FD rates than large PSU banks on the same tenure — your money is equally insured up to ₹5 lakh under DICGC.