FD Calculator

Formula & Calculation Methodology

Quarterly Compound Interest Formula: A = P × (1 + r / n)^(n × t), where n = 4 for quarterly compounding used by Indian commercial banks.

A = P left(1 + rac{r}{n}
ight)^{n 	imes t}

Step-by-Step Worked Example

Principal (P): ₹1,00,000 | Interest Rate: 7.5% p.a. | Tenure: 5 Years | Quarterly Compounding (n=4)

1. Quarterly Rate (r / 4) = 0.075 / 4 = 0.01875
2. Total Compounding Periods (4 × 5) = 20 quarters
3. Maturity Value A = 1,00,000 × (1.01875)^20 = ₹1,44,995
4. Total Interest Earned = ₹1,44,995 − ₹1,00,000 = ₹44,995

What is a Fixed Deposit?

A Fixed Deposit (FD) is a secure financial instrument offered by commercial banks, post offices, and NBFCs in India. Investors deposit a lump sum amount for a fixed tenure (ranging from 7 days to 10 years) at a predetermined interest rate, offering guaranteed returns higher than regular savings accounts.

How FD Interest is Calculated

Indian banks compound FD interest quarterly (every 3 months). The cumulative interest earned during each quarter is added to the principal to calculate interest for the next quarter:

• A = Total Maturity Amount
• P = Principal Deposit Amount (₹)
• r = Annual Interest Rate (in decimal, e.g., 0.075 for 7.5%)
• n = Compounding Frequency per year (n = 4 for quarterly)
• t = Duration in years

Simple vs Compound Interest in FDs

FDs with a tenure under 6 months use Simple Interest. FDs with tenures of 6 months or longer use Quarterly Compound Interest, accelerating growth over time.

Cumulative vs Non-Cumulative Fixed Deposits

• Cumulative FD: Interest is compounded quarterly and paid out together with the principal at maturity. Best for wealth accumulation.
• Non-Cumulative FD: Interest is paid out periodically (monthly, quarterly, or annually) to provide regular income for retirees.

FD Maturity Calculation Formula

Using A = P × (1 + r/n)^(n×t), you can accurately project your exact maturity payout before visiting a bank branch.

FD Calculation Example

Consider a 5-year FD of ₹1,00,000 at 7.5% p.a.:

1. Total Quarters = 20

2. Quarterly Compound Interest Rate = 1.875%

3. Final Maturity Amount = ₹1,44,995

4. Net Interest Earned = ₹44,995

Factors Affecting Fixed Deposit Returns

• Deposit Tenure: Longer tenures generally offer higher interest rates.
• Senior Citizen Rates: Senior citizens (aged 60+) receive an extra 0.50% to 0.75% interest rate boost in India.
• TDS Tax Deductions: TDS of 10% applies if annual FD interest exceeds ₹40,000 (₹50,000 for senior citizens).

Frequently Asked Questions