Just as online brokers have made stock investing possible with a click, several applications now allow users to invest in fixed deposits (FDs) from multiple banks online without needing savings accounts with those banks.
In April, low-cost broker Zerodha joined the bandwagon by launching such digital FDs on its investment platform Coin. Other apps that facilitate digital FD investments include Stable Money, SuperMoney, Jiraaf, and GoldenPi
The main advertising pitch for digital FDs is higher interest rates than those offered by traditional banks and the convenience of a one-stop shop. Some apps also offer credit cards against FDs, which attracts younger people who don’t have a credit score yet. But like any investment product, digital FDs require a proper understanding in terms of risks and suitability. Here we look at what’s on offer and who these investments make sense for.
Higher interest rates, with a catch
While online FDs are not new, the new-age platforms allow users to buy FDs of different banks and financial institutions in one place. The offerings typically include FDs of small finance banks and some non-banking financial companies (NBFCs).
Small finance banks are a new category of banks that emerged over the last decade, with the goal of promoting banking in underserved areas, such as semi-urban and rural India. Ujjivan Small Finance Bank, Equitas Small Finance and Jana Small Finance Bank are all SFBs. AU Small Finance Bank, one of the largest small finance banks, is now in the process of transitioning to a universal bank.
Small finance banks are regulated by the Reserve Bank of India (RBI), which also regulates traditional banks. However, due to their smaller size, they are considered to be slightly more risky than traditional banks such as State Bank of India or HDFC Bank, which are considered to be ‘too big to fail'. Due to this risk perception, the smaller banks have to pay higher interest rates on their FDs to attract deposits.
Consider the FD investment options on the Stable Money platform recently:
Suryoday Small Finance Bank FD at 8.10% for two years and six months; Shivalik Bank FD at 7.8% interest for one year and 10 months; and Slice Small Finance Bank offering 7.75% for a deposit of one year, six months and one day. In comparison, State Bank of India offers 6.25% for a one - to two-year FD, while ICICI Bank is giving a mere 6.5% for a deposit of three years and one day up to three years.
Some applications also offer deposits with NBFCs such as Shriram Finance, which offers a 7.6% interest rate on a three-year deposit.
The catch is in the perceived safety of these institutions.
If an RBI-regulated bank, including a small finance bank, fails, its account holders are guaranteed up to ₹5,00,000 under RBI's insurance scheme. This insurance is available per bank. However, deposits with NBFCs don’t have any insurance backing.
The convenience
When Pune resident Pratik Kamat, 35, started helping his parents manage their finances, he found it hard to keep track of their various FDs across different banks, including cooperative banks with limited online presence. He opened digital FDs for them in 2023. “I don’t go beyond ₹5 lakh” per bank, he said.
Kamat likes the convenience of checking the status and maturity dates of all FDs in one place, while also earning slightly higher returns.
However, he found that customer service isn’t always convenient. He once tried Stable Money’s WhatsApp number to get some information, but got no response. “Support is not up to the mark,” said Kamat.
Credit cards against FDs
Akash Deep, 24, downloaded Super.Money, a Flipkart-backed payments app, mainly because it was offering a credit card against a digital FD of just a few hundred rupees. In comparison, Deep said his traditional bank asked for a minimum deposit of ₹50,000 to issue a credit card against it. “Here, there is flexibility,” said Deep, a real estate professional in Delhi.
He opened a digital FD of ₹20,000 with Utkarsh Small Finance Bank via Super.Money and got a credit card with a limit of 90% of the FD amount. The card is part of the RuPay network and gives him cash back on certain transactions, he said, such as Flipkart purchases. “You are already incentivized to spend,” said Deep.
He has since increased the FD amount by ₹5,000 and hopes to build his credit score by spending on the credit card.
Difficult premature withdrawal
While opening the digital FD is smooth, closing them prematurely isn’t always so.
In March 2025, Nikhil Dhawan, 31, an IT professional in Ferozepur, applied to close two digital FDs he had bought for his mother. While money for one FD came immediately, for the second one, he didn’t get any closure message.
Dhawan frantically called the bank, Shivalik Bank, and Stable Money, the platform, but didn’t give a concrete answer on what was happening. “That didn’t give me good confidence,” said Dhawan. The money came by the next evening, but by then he had lost confidence.
He figured that a slightly higher interest gain was not worth the additional stress, especially for his parents. Later, Dhawan withdrew all of his mother’s money from digital FDs and moved it to a traditional bank. “Finance is a game of trust—once it's gone, it's gone,” he said.
Stable Money co-founder Saurabh Jain didn’t respond to calls and messages for comment.
Investment advisers say that rather than chasing high rates in digital FDs, investors should first consider their goals.
Most people who are not in retirement should be putting their long-term investments largely in mutual funds, they say. However, FDs can make sense for short-term needs, such as an upcoming holiday, or for parking money briefly, such as when someone has sold a property and hasn’t decided what to do with it. FDs can also be used as a place to keep emergency funds for a couple of years.
Even then, FDs typically make sense for people in lower income tax brackets. Individuals in the 30% tax bracket would be charged that income tax rate on FD interest income. So they may get better after-tax returns in an arbitrage fund, said Steven Fernandes, a Sebi-registered investment adviser and founder of Proficient Financial Planners in Thane.
Arbitrage funds are taxed only when sold, at 20% or 12.5%, depending on how long they are held. Arbitrage funds also provide stability, said Fernandes. “You have a mental accounting that this is a safe investment for me,” he said.
Once you decide that FDs fit your goal, consider digital FDs but within the ₹5 lakh limit, said Kamat, a registered mutual fund distributor who runs investment advisory firm The Wealth Guide in Pune. The main attraction for him is “having a single place where all the FDs were, and I can do it from my home,” said Kamat.