# Fixed Deposit

## Fixed Deposit Calculator

Try the Fixed Deposit Calculator and speculate the returns on your FD. See the amount of interest you will receive during your FD investment.

A fixed deposit calculator is an online tool to know their expected earnings. As you know, the FD gives a maturity payout at the end of a fixed deposit tenure. So it is wise to use the calculator and the details, such as the principal amount, tenure and applicable interest rate, to calculate the maturity amount of the FD investment. A fixed deposit calculator gives you an idea of your earnings in advance and helps you make a financial decision when you struggle with several choices.

## FD Calculator

## How to Use FD Calculator Online?

To calculate the interest on your fixed deposits account, follow these steps:

- Fill in the amount of your FD deposit
- Choose the Interest rate and the compounding interest period – monthly, quarterly and yearly
- Now, at last, choose the FD tenure

So use the FD return calculator, and see your total investment, interest earned, and maturity value.

**Fixed Deposit Calculation Formula**

There are two methods to calculate interest on fixed deposit investments –

- Simple interest
- Compound interest.

Let’s take a look at both of them –

**Simple Interest**

The formula for FD simple interest is as follows;

**SI = P x R x T / 100**

Where,

SI = Simple interest

P = Principal amount (deposit amount)

R = Rate of interest (per annum)

T = Deposit tenure

Let’s assume you invest a sum of INR 15,000 for five years at a 10% FD rate per annum.

On maturity, the simple interest will be:

15,000 x 10 x 5 / 100 = 7,500 Therefore, the total maturity amount is 22,500 (15,000 + 7,500)

**Compound Interest**

The formula for FD compound interest is as follows;

**A = P (1+r/n) ^ (nxt)**

Where,

A = Maturity amount

P = Principal amount

r = Rate of interest (in decimal)

n = number of compounding interests in a year

t = Deposit period

Let’s assume you invest INR 10,000 for three years at a 10% interest rate compounded quarterly.

**At the time of maturity, the calculations will be as follows:**

A = 10,000 [1+ (0.10/4)] ^ (4*3)

A = 10,000 (1 + 0.025) ^ (12)

A = 10,000 (1.025) ^ (12)

A = 13,449 (approximately)

Thus, compound interest earned over three years comes to 13,449 – 10,000 = 3,449. An FD calculator uses the compound interest formula to calculate interest earned and the final maturity amount.

**Advantages of Fixed Deposit Calculator**

There are many advantages of using the FD calculator, and some of these are:

- Very little work is required because the complicated formula for calculating FDs is not needed.
- Due to the speed with which the FD calculator returns results, it can be used to save precious minutes.
- This is free to use a calculator and is accurate so that results will be error-free
- Due to the accuracy of the FD calculator, you can plan your finances better.
- Remember, though, that every FD calculator has its limits. Any potential tax liability associated with FD returns is beyond the scope of the FD calculator.
- One of the easiest investment instruments to park funds with safety and assurance of returns is bank Fixed Deposits (FDs). An FD is a secure investment option that helps individuals increase their returns and grow wealth.

As per the SEBI (Securities Exchange Board of India), 95% of Indians prefer investing in bank FDs. More investors are attracted to FD investments in the rising interest rate scenario. Here individuals can find ways to maximize their FD returns.

In recent times, when the stock markets have been impacted adversely due to many global issues, FD seems like a great fit for a safe investment.

Investors need not do an in-depth analysis before parking their funds in an FD. Opening a Fixed Deposit account is convenient, and one can do it online with renowned banks as they allow customers to open Fixed Deposits online.

**How to Earn More on FD Investments**

Fixed Deposit account interest rates can be as high as 7.55% with renowned banks, depending on various factors. Here are the key aspects regarding FD investments that can help investors to maximize their FD returns:

**Prefer Longer tenure to Increase Interest Rate**

Banks offer FD accounts to individuals with a lock-in period between 7 days and 20 years. Financial experts advise investors to prefer a long-term FD tenure. This is because it increases their returns.

Individuals may consider keeping their funds invested in FDs with a maturity period between 5 to 10 years or even up to 20 years with renowned banks. The longer the tenure, the more the compounding interest on the deposited amount will be. And this way, individuals can earn more on FD accounts opened with a longer tenure.

Once the interest rate is applied to an FD account, it will remain the same for the entire tenure, even if the RBI (Reserve Bank of India) changes the repo rate for banks.

Investors should choose the FD tenure carefully, and in this, they can take help from an online FD calculator. With this tool, investors can estimate FD returns even before investing.

**Invest in Cumulative FDs**

Banks offer cumulative and non-cumulative FDs. Investors can open a cumulative FD to enjoy higher returns with the power of compounding interest. Cumulative FDs come with an option of reinvesting the interest income, unlike non-cumulative FDs.

Investors can earn interest on interest in cumulative FD accounts and increase their returns with the compounding effect. On the other hand, a non-cumulative FD offers periodic interest payouts – monthly/quarterly/annually as per the investor’s choice.

**Prefer a Loan Against FD Over Premature Withdrawal**

FD interest rates reduce by 1% due to premature withdrawal. As banks provide a viable option to make premature withdrawals to investors, they should avoid it as much as possible. Instead, they should take a loan against an FD to overcome short-term contingency rather than premature withdrawal.

With Loan Against FD, investors can avoid penalties that can reduce their interest rates on FDs and, thus, get the expected returns.

**Senior Citizen FDs Offer Additional Interest Rate**

One of the many things that can have an effect on the interest rates paid on FDs is the age of the depositor. The majority of retirees prefer to open fixed-deposit accounts so that they can earn returns on their money that are guaranteed to increase over time and get them one step closer to a retirement life free of compromises.

Banks offer additional interest rates on special FDs for senior citizens. These FDs are available for individuals aged between 60 – 80 years. In this FD, investors get an additional interest rate of 0.50%. And it further increases for investors aged 80 years and above. For them, FD returns an additional interest rate is 0.75%.

**Utilize Laddering Strategy**

A laddering strategy helps avoid losses due to the premature withdrawal of FDs. Individuals may have to withdraw their FDs before completing the tenure to meet the urgent need for funds. Banks penalize the FD interest rate if one withdraws their FD before maturity. But there’s a solution. Investors can open multiple FDs and follow the laddering strategy.

For instance, if the amount of money available to invest is Rs. 5 Lakhs, then one has the option of dividing that amount into five FDs with various expiration dates. By operating in this manner, investors are able to earn a fixed return on FDs without incurring penalties for early withdrawal.

## FAQs

Multiple factors affect the FD rate of interest, and some of them are –

- RBI’s monetary policy decisions
- Choosing the right banks and NBFCs
- The investment tenure
- The amount of the deposit

Your FD rate of return is based on your chosen bank, tenure, and FD deposit.

You will get a monthly interest payout if you choose a non-cumulative FD.

Your chosen duration affects how quickly the interest on your FD is compounded. If the duration of your deposit is less than six months, you will not receive the benefit of compound interest on that deposit.