In a world of volatile stock markets and risky crypto, Fixed Deposits (FD) remain the rock-solid foundation of Indian savings. Whether you are saving for a rainy day or parking your retirement corpus, FDs offer guaranteed returns with zero risk.
But do you know exactly how much interest you will earn after 5 years? Or how compounding (interest on interest) works in an FD? Our FD Calculator answers these questions in seconds.
Table of Contents
1. What is a Fixed Deposit (FD)?
A Fixed Deposit is a financial instrument offered by banks and NBFCs where you deposit a lump sum amount for a fixed tenure (ranging from 7 days to 10 years). In return, the bank pays you a fixed interest rate which is higher than a regular savings account.
There are two main types of FDs:
- Cumulative FD: Interest is reinvested (compounded) every quarter or year. You get the lump sum interest at maturity. (Best for growing wealth).
- Non-Cumulative FD: Interest is paid out to your bank account monthly, quarterly, or yearly. (Best for regular income/pensioners).
2. How is FD Interest Calculated? (The Formula)
Most Indian banks follow Quarterly Compounding for FDs. This means every 3 months, the interest earned is added to your principal, and in the next quarter, you earn interest on this increased amount.
Where:
A = Maturity Amount
P = Principal Amount
r = Rate of Interest
n = Number of times interest compounds per year (usually 4)
t = Tenure in years
3. How to use The Calculators Online FD Tool?
Calculating quarterly compounding manually is difficult. Our tool makes it effortless:
- Total Investment: Enter the amount you want to deposit (e.g., ₹1,00,000).
- Interest Rate: Enter the annual rate offered by your bank (e.g., 7.5%).
- Time Period: Select the duration (Years/Months).
The calculator will instantly generate:
- Maturity Amount: The final amount you will get.
- Total Interest: The pure profit earned on your deposit.
4. Why Choose FD over Savings Account?
| Feature | Savings Account | Fixed Deposit (FD) |
|---|---|---|
| Returns | Low (2.7% - 4%) | High (6% - 8%) |
| Lock-in | No Lock-in | Fixed Tenure (Penalty on early withdrawal) |
| Safety | High | High (Insured up to ₹5 Lakhs) |
5. TDS and Taxation on FD Interest
While FDs are safe, they are not entirely tax-free. You should be aware of TDS (Tax Deducted at Source):
- If your interest income exceeds ₹40,000 in a year (₹50,000 for Senior Citizens), the bank deducts 10% TDS.
- If you do not submit your PAN card, the TDS deduction is 20%.
- Tax Saving FD: There is a special 5-year Lock-in FD that qualifies for tax deduction under Section 80C (up to ₹1.5 Lakhs).