Fixed Deposit Calculator: Calculate interest on your FDs

(Last Updated On: November 8, 2016)

Are you stumped by the interest calculations on fixed deposit? In this post, I will make you understand how to calculate returns earned on your FD. Don’t worry, if you have never laid hands on Fixed Deposit Calculator before!

fixed-deposit

Let’s start counting your dimes!

A Brief Intro To Fixed Deposits

A fixed deposit has evolved as the secure investment option for risk-averse personalities. Money attracts everyone, but few of us are ready to take financial risks. Most people decide to invest in FD account, as it comes with fixed earnings without any financial risk. We can say, it is a safe investment that will preserve your capital!

Let’s Jump To Returns

A saving scheme without risk will offer your guaranteed earnings, but these earnings will be lower than equity or other investment schemes. But still, fixed deposit interest rates are higher than saving accounts. You lock down the amount for a fixed period, after completing the tenure, a bank will reward you with pre-defined returns !

Current Interest Rate On Fixed Deposits

As said before, interest rates are fixed but vary from bank to bank. Right now, banks are offering rates between 7 – 9%, but not more than that! For senior citizens, banks offer additional 0.5%.

How To Use A Fixed Deposit Calculator?

The majority of people have no clue about calculating fixed deposit interest or total investment at maturity. Because people simply use the percentage formula to find out interest earned. That’s completely wrong approach!

Before starting with the calculator, you need to understand a concept of compound interest!

READ  How can NPS help you save taxes

compound_interest

Here we are dealing with two types of simple and compound interest. In simple words, the interest amount remains same throughout the maturity period in case of simple interest.

On the other hand, we apply the percentage of previous balance (including interest) from last year.

Still Confused? Let’s Just Calculate It!

Simple Interest Simplified

Simple interest is always determined based on the initial investment only.
Let’s suppose,
Fixed deposit amount = Rs. 1,000
Tenure = 3 years
Interest Rate = 10% per annum

1st Year: Rs. 1,000 x 10% = Rs. 100
2nd Year: Rs. 1,000 x 10% = Rs. 100
3rd Year: Rs. 1,000 x 10% = Rs. 100

Total Interest Earned = Rs. 300
Total Maturity Amound = Rs. 1,000 + Rs. 300 = Rs. 1,300

Simiar Read: Guide On Fixed Deposits

Let’s Deal With Compound Interest

Here, we will apply percentage on both principal and earned interest.
Taking the data from the previous example!

1st Year: Rs. 1,000 x 10% = Rs. 100
2nd Year: Rs. (1,000 + 100) x 10% = Rs. 110
3rd Year: Rs. (1,100 + 110) x 10% = Rs. 121

Total Interest Earned = Rs. 331
Total Maturity Amount = Rs. 1,331

Now you get it these deposits have an edge of compound interest! They always end with handsome maturity amount with safety!

You can save your time by using online fixed deposit calculators. Just Google it and hit on top results! They will work fine! Otherwise, you just have learned how to find out maturity amount!

Post A Reply