The interest rates offered by banks on Fixed Deposits (FDs) depend on the tenure and amount chosen. Even the interest rates of post office fixed deposits vary from term to tenure.

India Post Term Deposit (POTD)
India Post offers fixed deposits in four categories: 1 year, 2 years, 3 years and 5 years. Deposits should be made in multiples of Rs 100 starting with a minimum of Rs 1000.
There is no upper limit on the deposit. After six months, an account can be terminated. Simple interest at POSA rate is payable when deposits are prematurely withdrawn from an account after six months but before one year. Section 80-C of the Income Tax Act allows deduction for deposits made in fixed deposits of 5 years.

India Post offers 5.5% on 2-year FD.

Bank deposits
Bank deposits vary according to the tenure of the deposit, with many large banks offering interest ranging from 2.5% to 7% for tenures between 7 days to 10 years. Here we take a look at the banks offering the highest rates on 2-year bank FDs.

FD interest rates of big banks
Large banks including SBI and HDFC Bank offer 5.5% interest rate on 2-year fixed deposits, while ICICI Bank offers 5.60% on 2-year tenure.

Penalty for premature withdrawal of fixed deposit
When you withdraw your bank FD as early as possible, banks levy a penalty on it. As per the terms and conditions provided by the bank, the penalty generally depends on when you withdraw the FD during the allotted period. The penalty fee typically varies from 0.5 to 1% of the interest rate.