The SBI FD calculator is a tool that allows a person to calculate the maturity amount for a fixed deposit in the State Bank of India (SBI). It provides an estimate of the amount that the applicant will get once his/ her SBI FD matures. It uses information, such as the investment amount, applicable SBI FD rate of interest, FD tenure and the frequency of interest calculation to arrive at the maturity amount.
Fixed deposit or FD is a risk-free investment scheme offered by different banks, including the SBI. A person can invest his/ her savings in an SBI FD account to earn attractive interest until maturity. The interest of an SBI fixed deposit can be calculated monthly, quarterly, semi-annually and annually. Moreover, the State Bank of India provides higher FD rates to senior citizens as compared to the general public.
SBI offers a range of fixed deposit schemes to their customers. The applicant should invest in an FD scheme that best suits their investment purpose and maturity goals. The FD rate of interests varies according to the maturity period selected. The SBI offers fixed deposits for a minimum tenure of 7 days to a maximum of 10 years. An SBI FD interest calculator can be helpful for an investor in the following ways:
An SBI FD rates calculator uses a formula to calculate the maturity amount for a fixed deposit. The formula is as follows:
A= P(1+r/n)^n*t
where ‘A’ refers to the maturity amount that you get at the end of the FD tenure,
‘P’ refers to the investment amount,
‘r’ refers to the applicable SBI FD rate of interest,
‘n’ refers to the frequency of interest calculation or the number of times the interest is calculated and
‘t’ refers to the FD tenure.
Please note that the value of ‘n’ is ‘1’ if the interest is compounded annually, ‘2’ if compounded half-yearly, ‘4’ if compounded quarterly and ‘12’ if compounded monthly.
For example: A person wants to invest Rs 1 lakh in a State Bank of India FD account for 3 years at an interest rate of 7% compounded half-yearly. In this case,
P = Rs 1 lakh
r = 7%
n = 2
T = 3
Therefore, if you apply the formula, it comes to A = 1,00,000 (1+7%/2)^2*3, the maturity amount equals to Rs 1,22,925 at the end of 3 years.
The interest on an SBI fixed deposit amount can be calculated in two ways - simple interest and compound interest. Take a look at the differences between simple interest and compound interest:
Categories |
Simple Interest on SBI FD |
Compound Interest on SBI FD |
Meaning |
It is the type of method where the interest is earned on an SBI fixed deposit at a fixed interest rate for a specified time. |
It is the type of method where the interest on an SBI FD is added to the principal amount and is not paid until maturity. |
Investment/ Principal Amount |
Under the simple interest method, the interest is earned only on the principal amount or the FD investment amount. The interest earned is added to the account of the depositor. |
Under the compound interest method, the interest compounded for the first year/ month is added to the principal amount. The sum of the principal amount and the interest compounded becomes the principal amount for the second year. The same continues until maturity. |
Change in Principal Amount |
The principal amount remains the same throughout the FD tenure. |
The principal amount increases every time the interest is compounded as the interest is added to the FD investment amount. |
Returns Earned |
The returns earned on an SBI FD through simple interest is lower as the principal amount remains the same throughout the tenure. |
The returns earned on an SBI FD through compound interest is higher as the interest is compounded which increases the principal amount. |
Formula |
Simple Interest = P*R*T/100, where ‘P’ refers to the principal amount, ‘R’ refers to SBI FD rate of interest and ‘T’ refers to the FD tenure. |
Compound Interest = P (1+r/100) - P, where ‘P’ refers to the principal amount and ‘R’ refers to SBI FD rate of interest. |
The SBI fixed deposit interest rate calculator can be used effortlessly on policybazaar.com. All you need to do is follow the procedure given below to use an SBI Bank FD calculator:
The SBI FD interest rates calculator comes with the following benefits:
For example, if you are getting an interest rate of 7% on your fixed deposit in SBI, then as per the rule of 72, 72/7 = 10.2. Thus, it will take you a little more than 10 years to double your FD amount.