Fixed Deposit Calculator

What is a Fixed Deposit (FD)?

A Fixed Deposit (FD) is a financial instrument offered by banks and non-banking financial companies (NBFCs) that provides a higher interest rate than a regular savings account. In an FD, you deposit a lump sum for a fixed tenure, and at the end of the term, you receive your principal along with the accrued interest.

How to Use This Calculator

1. Enter Principal Amount: Input the amount you want to deposit
2. Set Interest Rate: Enter the annual interest rate offered by your bank
3. Choose Tenure: Select or enter the FD duration in months
4. Select Compounding Frequency: Choose how often interest is compounded (quarterly is most common in India)
5. Review Results: See your maturity amount, interest earned, and effective APY

Understanding Your Results

Maturity Value

The total amount you'll receive when the FD matures, including your principal plus all accumulated interest.

Interest Earned

The total interest you'll earn over the FD tenure—the difference between maturity value and your initial deposit.

Effective APY (Annual Percentage Yield)

The actual annual return when compounding is factored in. APY is always equal to or higher than the stated interest rate due to compound interest.

FD Interest Formula

The compound interest formula for Fixed Deposits:

A = P × (1 + r/n)^(n×t)

Where:

• A = Maturity amount (principal + interest)
• P = Principal (initial deposit)
• r = Annual interest rate (as decimal)
• n = Compounding frequency per year
• t = Time in years

Common FD Tenure Options

Note: Rates vary by bank and are subject to change based on RBI policies

Impact of Compounding Frequency

How ₹1,00,000 grows at 7% interest over 2 years:

Most Indian banks compound FD interest quarterly.

Types of Fixed Deposits

1. Regular Fixed Deposit

Standard FD with fixed tenure and interest rate. Premature withdrawal may attract penalty.

2. Tax-Saving FD

5-year lock-in period FD that qualifies for tax deduction under Section 80C (up to ₹1.5 lakh). No premature withdrawal allowed.

3. Senior Citizen FD

Higher interest rates (typically 0.25-0.50% more) for depositors aged 60 years and above.

4. Flexi FD

Linked to savings account, allows partial withdrawals without breaking the entire FD.

5. Cumulative FD

Interest is compounded and paid at maturity along with principal.

6. Non-Cumulative FD

Interest is paid out periodically (monthly/quarterly/annually) throughout the tenure.

FD vs Other Investment Options

Premature Withdrawal Penalties

Most banks charge penalties for early FD withdrawal:

• Interest Rate Reduction: 0.5% - 1% lower than the applicable rate for the period of deposit
• Minimum Holding Period: Usually 7 days to qualify for any interest
• Tax-Saving FDs: No premature withdrawal allowed during 5-year lock-in

Tips for Maximizing FD Returns

1. Compare rates across banks: Interest rates can vary significantly between banks
2. Consider small finance banks: They often offer 0.25-0.50% higher rates
3. FD laddering: Split your investment across multiple FDs with staggered maturities
4. Senior citizen benefit: If eligible, always choose senior citizen FDs
5. Check for special offers: Banks often offer promotional rates for certain tenures
6. Consider cumulative FDs: For maximum compounding benefit if you don't need periodic income

Tax Implications of FD

• TDS: Banks deduct 10% TDS if interest exceeds ₹40,000 per year (₹50,000 for senior citizens)
• No PAN: If PAN is not provided, TDS is deducted at 20%
• Form 15G/15H: Submit to avoid TDS if your total income is below taxable limit
• Interest Taxation: FD interest is fully taxable as per your income tax slab

Frequently Asked Questions

Is FD interest calculated on a daily basis?

While interest accrues daily, most banks compound it quarterly. The frequency affects the final maturity amount.

Which is better - cumulative or non-cumulative FD?

Cumulative FDs offer higher returns due to compound interest. Non-cumulative is better if you need regular income.

Can I get a loan against my FD?

Yes, most banks offer loans up to 90% of your FD value at interest rates 1-2% above the FD rate.

What happens if the bank fails?

Deposits up to ₹5 lakh per depositor are insured by DICGC (Deposit Insurance and Credit Guarantee Corporation).

Can NRIs open Fixed Deposits in India?

Yes, NRIs can open NRE or NRO Fixed Deposits with repatriation benefits.

Note: This calculator provides estimates for educational purposes. Actual returns may vary based on specific bank terms and conditions. Always verify current rates with your bank before making investment decisions.