501-Day FD: 8% Interest on ₹5 Lakh — How Much Will You Earn?
If you are looking for a fixed-income investment with a predictable return, a 501-day FD offering 8% interest is currently attracting attention. Unity Small Finance Bank revised its fixed-deposit rates from July 15, 2026, and its special 501-day FD offers 8.00% per annum to regular customers and 8.50% to senior citizens on deposits below ₹3 crore.
The headline rate looks attractive compared with many conventional bank FDs, but the important question for a saver is simple: If you invest ₹5 lakh, how much money could you receive at maturity?
The answer depends on the interest-payment option and the bank's compounding methodology. For a cumulative FD, the actual maturity amount can differ from a simple-interest calculation.
501-Day FD: What Is the Interest Rate?
Under Unity Small Finance Bank's revised rate card effective July 15, 2026, the 501-day tenure carries an 8% annual interest rate for general customers and 8.50% for senior citizens. The rates apply to deposits below ₹3 crore.
The important detail is that the 8% rate is specifically linked to 501 days.
It is not the bank's rate for every one-year or two-year FD.
For comparison, Unity's rate for a 12-month FD is 7.50% for general customers and 8% for senior citizens. Deposits between 502 days and 18 months receive a lower 6.75% and 7.25%, respectively.
That makes the 501-day maturity a special-tenure deposit rather than a general FD rate applicable across the bank's entire deposit menu.
₹5 Lakh at 8%: How Much Can You Earn?
Suppose a regular customer deposits ₹5 lakh in the 501-day FD at 8% per annum.
A simple-interest calculation gives:
₹5,00,000 × 8% × (501 ÷ 365)
This works out to approximately ₹54,904 in interest.
That would put the total at around ₹5.55 lakh before considering the actual cumulative-deposit calculation and tax.
However, investors should not assume that ₹54,904 will necessarily be the exact maturity interest on a cumulative FD. The actual maturity value depends on the bank's applicable compounding and payout terms.
So the simple-interest figure is best viewed as an illustration rather than a guaranteed maturity quotation.
What If the Investor Is a Senior Citizen?
The difference becomes more noticeable for senior citizens because Unity Small Finance Bank offers 8.50% per annum on the same 501-day tenure.
Using a simple-interest illustration:
₹5,00,000 × 8.50% × (501 ÷ 365)
The interest comes to approximately ₹58,337.
Therefore, compared with the 8% rate, the additional 0.50 percentage point could generate roughly ₹3,433 more over 501 days on a ₹5 lakh deposit under a simple-interest illustration.
The actual maturity amount will depend on the bank's applicable FD calculation and payout option.
Why 501 Days Is Different From a One-Year FD
At first glance, investors might wonder why a bank would offer 8% for 501 days while offering a lower rate for some nearby maturities.
The answer is that banks frequently use special-tenure deposits to attract funds for a particular period.
A special FD can therefore have a rate that is higher or lower than the rates immediately before or after it.
In Unity's current rate structure, the contrast is quite clear:
| Tenure | General | Senior Citizen |
|---|---|---|
| 12 months | 7.50% | 8.00% |
| 1 year + 1 day to 500 days | 6.50% | 7.00% |
| 501 days | 8.00% | 8.50% |
| 502 days to 18 months | 6.75% | 7.25% |
| 18 months to 700 days | 6.75% | 7.25% |
These rates are from the bank's July 15, 2026 revision and can be changed by the bank in the future.
The lesson is useful for FD investors: don't compare banks only by their one-year FD rates. Check the complete tenure-wise rate card.
What Happens If You Break the FD Early?
This is an important risk that investors sometimes overlook while chasing a high FD rate.
Unity Small Finance Bank's revised 501-day FD carries a 1% penalty for premature withdrawal, according to the reported rate revision.
That means investors should avoid putting emergency money into a long-term or special-tenure FD simply because the advertised rate is attractive.
If you think you may need the money earlier, keeping a portion in a more liquid instrument can be more appropriate.
An FD is most useful when its maturity matches your financial requirement.
Is 8% FD Interest Really a Big Advantage?
An 8% nominal return can look impressive, but investors should compare it with inflation and taxation.
For example, if inflation averages 5% during the investment period, the real return before tax is much lower than the headline 8%.
Tax makes the effective return lower still.
FD interest is taxable according to the applicable income-tax rules. Depending on the investor's circumstances, tax may therefore reduce the amount actually retained.
This is particularly relevant for people in higher tax brackets.
The correct comparison is therefore not simply:
8% FD vs 7% FD
Instead, investors should compare:
post-tax return + liquidity + tenure + bank risk + deposit insurance.
Don't Put ₹5 Lakh in an FD Only for the Highest Rate
The 8% rate is attractive, but the bank offering it is a small finance bank, so investors should understand the regulatory framework and deposit protection before committing money.
Eligible bank deposits are covered by DICGC insurance up to ₹5 lakh per depositor per bank, including principal and interest, subject to the applicable rules.
This does not mean investors should automatically avoid small finance banks. It means that depositors should understand the protection limit and avoid treating the highest interest rate as the only factor in the decision.
Someone with ₹20 lakh of savings, for example, should not automatically place the entire amount in one bank simply because that bank advertises the highest FD rate.
Diversification can matter even for conservative investors.
What Other Banks Are Offering Around 8%
Unity is not the only small finance bank offering elevated FD rates.
Recent rate comparisons show several SFBs competing in the high-interest segment. For example, ESAF Small Finance Bank's current rate card lists 7.50% for regular customers and 8% for senior citizens on a 501-day deposit, while its two-to-three-year category offers 7.75% and 8.25%, respectively.
Other small finance banks have also offered rates around or above 8% on selected tenures.
This competition is useful for depositors because it gives them more options. But it also reinforces the need to compare the exact tenure, deposit amount, premature-withdrawal rules and bank-specific conditions rather than simply choosing the bank with the biggest headline number.
Who Should Consider a 501-Day FD?
A special-tenure FD may suit someone who:
Wants relatively predictable fixed-income returns
Can keep the money invested for roughly 16–17 months
Does not need the ₹5 lakh for an emergency
Understands the bank's premature-withdrawal rules
Has compared post-tax returns
Is comfortable with the particular bank
Has considered deposit diversification
It may be less suitable for someone who needs frequent access to the money.
What Should Investors Check Before Booking?
Before investing ₹5 lakh, check these points carefully:
1. Rate: Confirm that 8% is still applicable on the day you book the FD.
2. Tenure: Make sure the deposit is exactly eligible for the 501-day rate.
3. Payout option: Check whether you want cumulative interest or periodic interest payouts.
4. Premature withdrawal: Understand the applicable penalty and revised interest calculation.
5. Tax: Calculate the post-tax return based on your own tax situation.
6. Deposit insurance: Understand the DICGC protection framework.
7. Liquidity: Do not lock away money that you may need for emergencies.
Bottom Line
The 501-day FD at 8% is a notable special-tenure offer for regular customers, while eligible senior citizens can earn 8.50% at Unity Small Finance Bank under the revised rates effective July 15, 2026.
On a ₹5 lakh deposit, a simple-interest illustration gives roughly ₹54,904 in interest at 8% over 501 days, before tax and without treating that figure as the bank's exact cumulative maturity value.
The bigger lesson is that a high FD rate should not be evaluated in isolation. Tenure, compounding, tax, premature withdrawal rules, deposit insurance and the bank's financial position all matter.
For savers who can comfortably lock their money for 501 days, the rate is worth comparing with competing FDs. But the highest advertised percentage is not automatically the best choice for every investor.
Follow our blog for more FD-rate updates, personal-finance news and simple investment explainers.
This article is for informational and educational purposes only and should not be considered investment advice
Comments
Post a Comment