Looking for a steady and reliable source of monthly income? Fixed Deposits (FDs) with monthly income options offer a smart and secure way to receive regular returns without touching your principal amount. Ideal for retirees, homemakers, or anyone seeking stable passive income, these FDs ensure timely interest payouts every month.

Here’s everything you need to know about how to earn monthly income from a fixed deposit.

✅ What Is a Monthly Income Fixed Deposit?

A Monthly Income FD is a special type of fixed deposit where the interest earned is paid out to the investor every month. Unlike traditional FDs where interest is reinvested or paid at maturity, this option is designed to provide liquid cash flow regularly.

The principal remains untouched until the end of the FD tenure, and only the interest is credited to your bank account every month.

🏦 Top Features of Monthly Income FDs

Guaranteed Returns: Fixed interest payout every month
Flexible Tenure: Usually ranges from 1 year to 10 years
Stable Income: Ideal for retirees or those without active income
Low Risk: Backed by banks and NBFCs, making them a safe investment

💼 How to Start a Monthly Income FD

Choose a Bank or NBFC: Compare interest rates across banks and financial institutions.
Select Payout Frequency: Opt for monthly payout instead of quarterly or cumulative.
Decide Tenure & Amount: Choose the deposit amount and tenure based on your income needs.
Open FD: Open online via net banking or visit your nearest branch.

📊 Example of Monthly Income from FD

Let’s say you invest ₹5,00,000 in a fixed deposit with 7.20% annual interest (monthly payout):

Annual interest: ₹36,000
Monthly income: ₹3,000

You will receive ₹3,000 every month, while the principal of ₹5,00,000 remains intact until maturity.

🔎 Banks Offering Monthly Income FDs (As of 2025)

Bank/NBFC	Interest Rate (Approx.)	Minimum Amount	Tenure
SBI	6.50% – 7.00%	₹1,000	1 – 10 years
HDFC Bank	6.75% – 7.10%	₹5,000	1 – 10 years
ICICI Bank	6.70% – 7.20%	₹10,000	1 – 10 years
Post Office MIS	7.40%	₹1,000	5 years

Rates are indicative and subject to change. Please check with the respective bank/NBFC.

💡 Who Should Consider This Option?

Senior citizens looking for retirement income
Homemakers who want a stable monthly payout
Low-risk investors wanting guaranteed returns
Parents planning monthly income for children’s expenses

⚠️ Things to Keep in Mind

Interest earned is taxable under “Income from Other Sources”
Premature withdrawal may incur penalties
TDS is applicable if interest exceeds ₹40,000/year (₹50,000 for senior citizens)

Also Read: HDFC Bank, Yes Bank Cut FD Rates – Latest Updates & Impact