The disadvantages of investing in FDs are a) Low-Interest rate: The interest rate on FDs is usually lower than returns on other market-linked instruments. b) Interest Rate doesn’t change: The interest rate on FD does not change during the tenure. Let's say you invest in a 2-year FD at a 6% interest rate, the inflation might change after 6 months, but you will continue to receive the interest at 6% throughout the tenure. As a result, inflation or other factors might make the effective interest rate too little comparatively.  c) Taxation: Interest income from FDs is taxable, with tax deducted at source.