Generally the rates decreases over the longer period of time as banks do not want to provide higher interest rated for longer period. "Two to three years is a good time to lock into an FD," says Rao.

For example, if you find any option in which banks are providing higher interest rates for one or two years, you can consider them. But, if you are willing to reinvest after a year, the rates might decline.

On FDs of 5-10 years State Bank of India of India offers 8.75 percent interest, while if you invest in the recurring deposit (RD), you can deposit little amounts every month and still avail the same return. On one hand where FDs and RDs seem more attractive, don’t forget that returns gained from Provident Fund are tax-free, unlike returns from bank FDs.

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