A fixed deposit (FD) is a type of financial product offered by most banks and non-banking financial organisations (NBFCs). A fixed deposit has a variable length, a guaranteed rate of interest, and a predefined rate of interest. Your FD investment will always receive the specified interest rate, regardless of market volatility. You can invest for a period of seven days to ten years. The greater the appropriate interest rate and interest collected due to compounding, the larger the deposit amount for a longer period.

An investor can use the fixed deposit calculator to predict the amount of money that will be due at the end of a set period of time. Before making an investment, you may estimate the interest income using an FD calculator. The investment amount, current interest rate, and tenure are all inputs into the FD calculator. It outputs the amount of money earned and the maturity amount.

The fixed deposit calculator merely estimates wealth acquired and makes no guarantees or claims about the amount estimated based on the specified inputs.

M

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**Invested Amount**

**Rs.**

**Total Growth**

**Rs.**

**Final Maturity**

**Rs.**

**Fixed Deposit Calculation Formula**

The bank fixed deposit interest rate is pre-determined at the time of investing. Furthermore, it remains consistent during the investment time. A few elements that influence fixed deposit interest rates are as follows:

- To begin, the duration of the investment is a component that influences the interest rate; the longer an investor stays engaged, the greater the interest rate will be.
- A senior citizen’s rate of interest is higher, ranging from 0.25 percent to 0.75 percent more than the regular rate. The current economic situation is also a major determinant.
- To set interest rates, financial institutions and banks evaluate economic factors such as the repo rate and inflation rate.
- Finally, there are two ways to compute the interest on a fixed deposit: simple interest and compound interest.

**Simple Interest on Fixed Deposit**

The income earned on the principle amount invested at the set interest rate during the investment lifespan is known as simple interest.

Formula for calculation

**Simple Interest = (P * R * T)/ 100**

**P**– Principal amount invested

**R**– Rate of interest (%)

**T**– Tenure

**Example on Simple Interest**

Mr. Ajay invested Rs 100,000 for 10 years at an interest rate of 5% per annum.

Simple Interest = (Rs 100,000 * 5 * 10 years)/ 100 = Rs 50000

Principal amount invested is Rs 100,000

Rate of interest (%) is 5% per annum

The tenure of the investment made is 10 years

**Maturity Value = Principal amount + Simple Interest**

= Rs 100,000 + Rs 50,000

= Rs 150,000

**Compound Interest on Fixed Deposit**

The interest gained on the principle amount invested plus the interest earned is known as compound interest. The interest rate is increased by the number of periods (years) during which the interest is compounded and multiplied by the principle invested.

### Formula for calculation

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

**A** = Maturity Amount

**P** = Principal amount invested

**r** = Rate of Interest (in decimals)

**n** = number of compounding in a year

**t** = number of years

**Example on Compound Interest**

Mr. Arun invested Rs 1,00,000 for 10 years at an interest rate of 5% per annum compounded quarterly

Here,

Principal amount invested is Rs 100,000

Interest Rate is 5%

Number of compounding in a year is 4 i.e. 1 every quarter

Number of years of investment is 10 years

A = 1,00,000 (1+0.05/4) ^ (4*10)

A i.e. maturity amount = Rs 1,64,361

Interest amount = Rs 1,64,361 – Rs 1,00,000 = Rs 64,361

**FAQs**

**Que.1 What is the maximum and least amount a fixed deposit may hold?**

**Ans.** The maximum and lowest amounts that can be invested in a fixed deposit vary by bank. If an investor wants to invest more than Rs 1 crore, he can ask the bank for a tailored interest rate.

**Que.2 What is the minimum term for which a fixed deposit can be held?**

**Ans.** Customers can invest their money for as little as seven days and as long as ten years.

**Que.3 What is the interest rate on a fixed deposit for older citizens?**

**Ans.** Senior citizens pay a greater rate of interest than other citizens. The interest rate on a fixed deposit account varies from 9% to 9.5 percent based on the term of the account.

**Que.4 Is it preferable to invest in a fixed deposit?**

**Ans.** The interest on a fixed deposit is higher than the interest on a savings account balance. As a result, investing in a fixed deposit is preferable than storing money in a savings account. However, an investor should consider other investment options that offer a better rate of return than a fixed deposit. Debt mutual funds and tax-saving mutual funds are two more investing alternatives. These alternatives provide larger returns than fixed deposits, but they also include the risk of market fluctuations.