Union Bank offers Fixed Deposit interest rates that vary depending on the deposit term. You can earn returns on deposits short as 7 days and higher returns on longer-term and special FDs with senior citizens getting additional benefits.
If you want an investment with fixed returns, Union Bank FDs can help your savings grow steadily while keeping your capital safe.
This blog explains Union Bank FD interest rates, including rates for different terms, benefits for senior citizens and tax rules. It also covers withdrawal rules, who can invest and tips, on choosing the right FD term for your goals. Whether you are saving for emergencies planning retirement or want returns, this guide will help you decide.
Table of Contents
- Latest Union Bank FD Interest Rates
- Advantages of a Union Bank Fixed Deposit
- Union Bank FD Rates for Senior Citizens
- Taxation and Real Returns
- Eligibility for Union Bank Fixed Deposit
- Premature Withdrawal Rules
- How to Choose the Right FD Tenure
- The Bottom Line
- FAQs on Union Bank Fixed Deposit Interest Rates
Latest Union Bank FD Interest Rates
Union Bank of India offers different FD interest rates depending on the tenure and depositor category. Generally, longer tenures provide higher returns. Senior citizens and super senior citizens receive additional interest benefits over regular depositors.
Here’s an overview of the latest Union Bank FD interest rates for deposits below ₹3 crores:
| Tenure | General Citizens | Senior Citizens |
|---|---|---|
| 7 – 14 Days | 3.50% | 4.00% |
| 15 – 30 Days | 3.50% | 4.00% |
| 31 – 45 Days | 3.50% | 4.00% |
| 46 – 90 Days | 4.50% | 5.00% |
| 91 – 120 Days | 4.80% | 5.30% |
| 121 – 180 Days | 5.00% | 5.50% |
| 181 Days – Less than 1 Year | 6.25% | 6.75% |
| 1 Year | 6.80% | 7.30% |
| 456 Days (Special Tenure) | 7.30% | 7.80% |
| Above 2 Years to 5 Years | 6.50% | 7.00% |
| Above 5 Years to 10 Years | 6.25% | 6.75% |
Disclaimer: FD interest rates are subject to change based on RBI policy revisions and bank decisions. Always verify the latest rates on Union Bank’s official website or branch before investing.
Advantages of a Union Bank Fixed Deposit
Apart from competitive returns, Union Bank fixed deposits offer several investor-friendly features that make them suitable for different financial needs.
Nominal Deposit Amount
You can start investing with as little as ₹1,000, making FDs accessible even for first-time investors or students beginning their savings journey. There is no upper investment limit, which also makes it suitable for high-value investors.
Real-life example:
A young salaried employee earning ₹30,000 per month can start with a ₹5,000 FD and gradually build disciplined savings without requiring a large initial corpus.
Loan and Nomination Facility
Union Bank allows you to pledge your FD as collateral for a loan during emergencies. This means you can access funds without prematurely breaking your deposit.
You can also nominate a family member or beneficiary, ensuring smooth claim settlement in unforeseen situations.
Why this matters:
Instead of withdrawing your FD and losing interest benefits, you may borrow against it at comparatively lower interest rates.
Auto-Renewal System
Union Bank offers an auto-renewal feature where your FD amount gets automatically reinvested after maturity if no maturity instructions are provided.
This helps investors continue earning returns without interruption and avoids idle funds sitting in savings accounts at lower interest rates.
Also Read: Fixed Deposit Auto Renewal
Union Bank FD Rates for Senior Citizens
Union Bank provides additional interest benefits to senior and super senior citizens to support retirement income planning.
- Senior citizens aged 60 years and above receive an additional 0.50% interest on deposits up to ₹5 crores
- Super senior citizens aged 80 years and above receive an additional 0.75% interest benefit
Why senior citizen FDs are popular
For retirees seeking stable monthly income, FDs remain one of the safest investment choices in India. Many senior citizens prefer FDs because:
- Returns are fixed and predictable
- Capital remains relatively safe
- Monthly or quarterly payout options are available
- Interest rates are higher than regular savings accounts
Taxation and Real Returns
While fixed deposits provide guaranteed returns, taxation significantly impacts your actual earnings. Understanding post-tax returns is essential before investing.
Important Taxation Points
- Interest earned on FD is fully taxable under “Income from Other Sources”
- Banks deduct TDS if annual FD interest exceeds the prescribed threshold
- Your tax slab directly affects your final returns
- Senior citizens may submit Form 15H to avoid TDS if eligible
- Non-senior citizens can submit Form 15G if taxable income falls below exemption limits
- Tax-saving FDs with a 5-year lock-in qualify for deductions under Section 80C up to ₹1.5 lakh
Understanding Real Returns
Your real return is the actual gain after adjusting for:
- Tax
- Inflation
- Premature withdrawal penalties (if any)
For example: If your FD earns 7% annually but inflation is 5%, your actual wealth growth is only around 2% before tax. After tax deductions, the effective gain may reduce further.
This is why comparing post-tax returns is equally important while selecting an FD tenure.
Eligibility for Union Bank Fixed Deposit
To open a fixed deposit account with Union Bank of India, the following entities are eligible:
- Indian residents
- Institutions or agencies
- Associations
- Societies
- Clubs and trusts
- Joint account holders
- Minors with a guardian or adult co-account holder
Premature Withdrawal Rules
Union Bank allows premature FD withdrawal, but doing so may attract a penalty.
Typically, a penalty of up to 1% reduction in interest rate applies on early withdrawal.
Example of Premature Withdrawal
Suppose you invest in a 1-year FD at an interest rate of 6.80%. If you withdraw the amount before maturity, the applicable interest may reduce to 5.80% after penalty adjustment.
Things to Consider Before Breaking an FD
- You may lose expected returns
- Penalties reduce actual earnings
- Tax liability on earned interest still applies
- Emergency funds should ideally be kept separately
How to Choose the Right FD Tenure
Selecting the ideal FD tenure depends on your financial goals and liquidity needs.
| Financial Goal | Suggested FD Tenure |
|---|---|
| Emergency fund | 6 months – 1 year |
| Vacation planning | 1 – 2 years |
| Child education savings | 3 – 5 years |
| Retirement income | 5 years or more |
| Tax saving | 5-year tax-saving FD |
Pro Tip
Instead of investing a lump sum into one FD, many investors use an FD laddering strategy. This involves splitting money across multiple tenures to balance liquidity and returns.
The Bottom Line
Union Bank Fixed Deposits can be a suitable investment option for individuals seeking capital safety, predictable returns, and flexible tenure options. With deposits starting at just ₹1,000 and additional benefits for senior citizens, Union Bank FDs cater to a wide range of investors.
Before investing, compare the latest FD rates, evaluate post-tax returns, and align the tenure with your financial goals. If liquidity is a concern, choosing shorter tenures or creating an FD ladder may help maintain flexibility while still earning stable returns.
Using an FD calculator before investing can also help estimate maturity value and make better financial decisions.
FAQs on Union Bank Fixed Deposit Interest Rates
What is the highest Union Bank FD interest rate?
Currently, the highest Union Bank FD interest rate is 7.80% for senior citizens on the special tenure of 456 days. General citizens can earn up to 7.30% for the same tenure.
What is the minimum amount required to open an FD with Union Bank?
You can start a Union Bank fixed deposit with a minimum amount of ₹1,000.
What are the current FD interest rates of Union Bank of India?
Union Bank FD interest rates generally range between 3.50% and 7.30% for regular citizens, depending on the tenure. Senior citizens receive additional interest benefits.
What is the minimum and maximum tenure for Union Bank FD?
The minimum FD tenure usually starts from 7 days, while the maximum tenure can extend up to 10 years.
Are senior citizens offered higher FD interest rates?
Yes. Senior citizens receive an additional 0.50% interest, while super senior citizens may receive up to 0.75% extra interest on eligible deposits.
Can I withdraw my Union Bank FD before maturity?
Yes, Union Bank allows premature withdrawal of fixed deposits. However, a penalty of up to 1% lower interest may apply.
Is the interest earned on Union Bank FD taxable?
Yes, FD interest is taxable as per your income tax slab. TDS may also apply if annual interest crosses the prescribed threshold.
Can I get a loan against my Union Bank FD?
Yes. Union Bank allows depositors to avail loans or overdraft facilities against eligible fixed deposits.
