A fixed deposit is a type of investment that has a fixed term, which means, your money is invested for a fixed tenure. Many banks and Non-Banking Financial Institutions offer the facility of fixed deposit. Most of the banks and NBFCs provide high-interest rates on FD with certain conditions and terms. The amount you deposit in an FD account is locked for a predefined fixed term, which may vary from seven days to 10 years.
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The rate of interest on FD is independent of any market fluctuation. In addition to this, some financial institutes offer the facility of premature withdrawal from FD, but in such a case, you have to pay a penalty. For example, the penalty charged on SBI fixed deposit in case of premature withdrawal is 0.50% for FDs of up to Rs. 5 lakhs and it is 1% for all the tenures of FDs of more than Ras 5 lakhs and less than Rs. 1 Crore.
If you want to know the accurate amount that you will get at the time of the maturity of your FD and want to determine the interest rate on FD, then you can use the FD calculator. Or in other words, if you want to calculate returns on your fixed deposit amount, you can use the FD calculator.
Calculate the returns on your Fixed Deposit can be a time-consuming and complicated process. An online fixed deposit calculator enables you to figure it out without any hassle. The benefits of using an FD calculator are as follows:
There are two types of fixed deposits offered by most of the banks and NBFCs. These FDs are – Compound Interest FD and Simple Interest FD. Generally, a website that provides you the FD calculator facility has calculators for both these FD types.
The FD calculator for FDs that offer simple interest use the below-mentioned formula:
M = P + (P x R x T / 100), where
Let us take an example to understand this. Suppose, you have deposited Rs. 1,00,000 for five years at the rate of interest of 10%, then as per the aforementioned formula:
M = 1,00,000 + (1,00,000 X 10 X 5/ 100)
= Rs. 1, 50, 000
For compound interest FDs, the FD calculator uses the below-mentioned formula:
M = P + P {(1 + i / 100) t – 1}, where
For instance, if we take the same example with the same variables, the FD calculator for compound interest will calculate:
M = 1,00,000 + {(1 + 10/100) 5 – 1}
= Rs. 1,61,051
You can know the exact amount that you will get from your FD at the time of its maturity by using an FD calculator. Apart from this, there are some other advantages of using an FD calculator:
The factors that affect the maturity amount and interest earned on your FD are:
Ans: Most of the FD calculators are available free of cost and you do not have to pay anything to use them.
Ans: The maturity amount that you get from your FD is the sum of invested principal amount and pre-decided rate of interest on FD over a fixed tenure. You can calculate the maturity amount very easily by using an FD calculator even before investing your money.
Ans: The minimum and maximum amount to invest in fixed deposit depends on the bank and may vary.
The best part about an FD calculator is, you can calculate the maturity amount even before investing in an FD. Hence, you can plan your future accordingly. Since most of the calculators are free to use so, you can compare different FDs and make an informed decision.