Monthly Payout FD Calculator

Fixed Deposits are known as a risk-free investment method for people who have money and no idea about investment. It is quoted as ‘risk-free’ because of the guaranteed returns in this deposit.

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Overview

The fixed deposits can be treated as a regular source of investment. With the help of fixed deposits, an individual can earn an interest amount for their already existing money. 

The Fixed Deposit Calculator is provided by every bank and insurance corporation on the official website. It is also commonly known as the Monthly Payout FD Calculator. Using such a  calculator give the exact interest amount that a person can get paid monthly for their fixed deposit. 

Understanding the Difference Between Simple Interest and Compound Interest

This interest is a quick method for calculating the interest charge on a loan amount. Simple interest is calculated by multiplying the principal amount's daily interest rate and the number of days between payments.

This interest is applied mostly on short-term loans or short-term fixed deposits. 

The formula for simple interest is,

                       A = P (1+rt)

Where,

  • A is the final amount that will be received at the commencement of a fixed deposit maturity.
  • P is the initial principal amount that is invested as a fixed deposit.
  • r is the interest rate provided by the bank annually for the deposited amount.
  • t is the time in which the customer chooses the fixed deposit. The period must be provided in years for getting a clear calculation.

Compound Interest is applied for long-term loans or fixed deposits. This interest differs a lot from simple interest. In this interest, the calculation is done based on both the initial principal amount and the accumulated interest from previous periods.  Compound interest is also known as ‘Interest on Interest’. 

When a bank offers compound interest for a particular fixed deposit amount, the customer has a huge profit in it. With the help of compound interest, the sum will grow faster than simple interest.  

The formula for compound interest is,

                            A = P (1+r/n)^nt

Where,

  • A is the final amount that will be received at the commencement of a fixed deposit maturity.
  • P is the initial principal amount that is invested as a fixed deposit.
  • r is the interest rate provided by the bank annually for the deposited amount.
  • n is the number of times when interest is applied per period.
  • t is the number of times elapsed in a fixed deposit. 

How Can Monthly Payout Fixed Deposit Calculator Help?

Fixed Deposits can be chosen by individuals who had a sudden inheritance or even some spare money to invest in getting a payout and earning interest. Many customers who will deposit an amount as a Fixed Deposit may not have a clear idea of the interest rates provided and other details.  

The Monthly Payout FD Calculator can help a customer understand how much amount they can get as an interest for a particular fixed deposit amount. Customers can even choose the time for which they can select for depositing their amount. 

The Monthly Payout FD Calculator is available on every financial corporation and bank’s official websites. By providing some information, customers can decide on which bank offers the best interest rate. The calculator is free to use and available online, so the customer can easily compare various interest rates provided by multiple banks. 

04 Things to Consider While Using the Calculator

Listed below are some pointers to be considered while using a Monthly Payout FD Calculator online:

  1. Estimated Amount

    Customers must know how much they have to invest in fixed deposits. 

  2. Interest Rate

    The rate of Interest provided by each bank differs a lot. Customers have to choose the bank which provides a higher interest rate for the amount invested in Fixed Deposit.

  3. Tenure of Deposit

    Tenure of deposit can be chosen between 7 days and 10 years for a fixed deposit.  Customers can choose any tenure period depending upon their convenience. 

  4. Compound Interest Tenure

    Compound Interest tenure is calculated based on the maturity amount that is to be earned at the end of Fixed Deposit commencement. The customer's tenure period can be chosen while investing in fixed deposits as – monthly, quarterly, half-yearly and yearly. 

Advantages of using Monthly Payout FD Calculator

Some of the advantages of using the Monthly Payout FD Calculator are listed below:

  1. Free of Cost 

    Customers can use the Monthly Payout FD Calculator completely free of cost. Since it is free of cost, customers can use it again and again to compare various available Interest rates provided among banks and financial institutions.

  2. Saves Time

    Customers can use this calculator online, and they can use this calculator in the comfort of their house. 

  3. Detail on Investment 

    Customers can get detailed information on the investment procedure before investing an amount as Fixed Deposit with a particular bank or financial institution.

  4. Compare and Choose

    The Monthly Payout Fixed Deposit Calculator provide details of every amount entered while calculating. Thus, customers can compare various available options and choose the best bank or financial institution as per the customer's convenience.

How Does the Calculator Work?

Using the fixed deposit calculator can be used differently from one bank to another. However, there are some common steps involved in using a Monthly Payout FD Calculator. Steps to follow for using a Monthly Payout FD Calculator are:

  • The customer has to choose any bank or financial corporation in which they are going to deposit their money.
  • Visit the official website of the particular bank or financial institution.
  • Open the online FD Calculator from the website of the bank.
  • Customers have to enter an estimated amount for depositing in the bank.
  • Choose the rate of Interest provided by the bank for a particular amount.
  • Select the period for which the amount will be deposited and finally click on the “Calculate” button. The interest amount will be shown on the website.

An individual can even invest a small amount as FD. The minimum limit provided by almost every bank is Rs 1000. The maximum amount for depositing has no limit. Fixed deposits are helpful for both individuals and corporations for investing their money.

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Written By: PolicyBazaar - Updated: 14 July 2021
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