Should you wait for FD rate hike or invest now?

Retail inflation for September 2026 rose sharply to 5.54%, up from 4.85% in August. Rising inflation was the key factor behind the Reserve Bank of India (RBI) increasing the repo rate to 5.50% last week. Many experts believe inflation is likely to increase further because of factors such as supply disruptions, high crude oil prices and others. They also predict the RBI may increase the repo rate due to rising inflation.

This can create a situation where many banks may be compelled to increase fixed deposit (FD) interest rates. If deposit rates increase, many FD investors will feel relieved as they have been going through a low-rate FD cycle for the last four years.

But anticipating that FD rates may rise because of rising inflation, should you wait for fresh investments and renewals of earlier deposits or invest now? How much extra maturity can you get on a Rs 2 lakh investment in the 5-year FD if banks increase interest rates by 10-100 bps? Find out here!

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How 10-100 bps interest rate increase can impact your Rs 2 lakh investment in 5-year FD

In the table, you can see that a 30-bps FD rate hike means an extra Rs 4,056 at a Rs 2 lakh investment in 5 years. A 60-bps increase can give you Rs 9,553 more, while a 100bps increase will help you get Rs 13,744 more. Amounts can be higher if the invested amount is more than Rs 2 lakh.

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But here comes the big question: should you wait to get that extra amount, or invest now?

Will FD interest rates rise in the near future?

Adhil Shetty, CEO, Bankbazaar, says that the RBI has taken a more cautious stance on inflation, so deposit rates could edge up over the next year.

Shetty says a lot will depend on how inflation behaves.

“If it eases, deposit rates could also stay close to where they are,” says Shetty.

However, looking at inflation trends over the last year, inflation has been continuously rising from October 2025 onwards, from 0.25% to 5.54%. The possibility of further rise cannot be ruled out.

Gurmeet Singh Chawla, managing director, Master Portfolio Services, says FD rates are likely to edge up over the next year, though not uniformly.

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Chawla opines further increases depend on inflation, liquidity and RBI action, and a sustained rise across all tenures cannot be assumed.

Should FD investors wait for higher rates or lock in money at current rates?

Shetty says for FD investors, waiting and locking in both have a cost.

“If rates rise, those who wait may earn a little more later, but their money, often parked in a savings account, earns very little in the meantime. Locking in gives certainty, but it can mean missing a further rise,” says Shetty.

So what should they do? Shetty suggests FD investors take a middle path.

“Put in some money now and the rest later, once the rate picture becomes clearer,” recommends Shetty.

Chawla suggests locking in part of the money at current rates for goals with a fixed time horizon.

“Keep the rest in shorter-tenure FDs for flexibility, to benefit if banks offer better rates later,” says Chawla.

Experts suggest following FD laddering strategy

Both Shetty and Chawla also suggest FD investors follow the FD laddering strategy, where the investment is split into deposits of different lengths.

Explaining how the FD laddering strategy works, Shetty says, “For example, a Rs 12 lakh investment can become four deposits of Rs 3 lakh each, for one to four years. As each one ends, it can be renewed at the rate then available.”

Shetty says that since FD rates may rise, investors can open deposits in parts over a few weeks. Shetty also suggests making FDs in more than one bank since deposit insurance covers up to Rs 5 lakh per person per bank.

Shetty is referring to the RBI’s Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme, which insures all deposits with banks such as savings, fixed, current, recurring, etc., up to a maximum limit of Rs 5 lakh per bank.

How much time can banks take to increase FD rates?

Chawla says there is no fixed timeline for it.

“Some change their FD rates within days, while others take weeks, depending on how much money they need to raise, how fast loans are growing and what rival banks are offering,” says Chawla.

Chawla reveals that shorter tenures, usually six months to one year, tend to move first compared to long tenures.

So, while banks may increase FD rates in the near future, waiting for the right time may not be an ideal strategy. As experts suggest, you can invest some money in FDs keeping fixed-term goals in mind and invest the rest in short-term FDs to take advantage of rising rates.