1. What is the Monthly Interest Payout Calculation?

The Monthly Interest Payout calculation determines the fixed monthly interest income from a Fixed Deposit investment. It's calculated based on the principal amount and annual interest rate, providing a predictable income stream.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( I_{month} \) — Monthly interest payout (currency)
• \( P \) — Principal amount (currency)
• \( r \) — Annual interest rate (decimal)

Explanation: The formula divides the annual interest rate by 12 to get the monthly rate, then multiplies by the principal amount to calculate the monthly interest payout.

3. Importance of Monthly Interest Calculation

Details: Calculating monthly interest payouts helps investors plan their cash flow, compare different FD options, and make informed investment decisions for regular income needs.

4. Using the Calculator

Tips: Enter the principal amount in your local currency and the annual interest rate as a decimal (e.g., 0.05 for 5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is the monthly interest payout fixed throughout the FD tenure?
A: Yes, for fixed-rate FDs, the monthly payout remains constant throughout the investment period.

Q2: How does compounding affect monthly payout FDs?
A: With monthly payout options, interest is paid out rather than compounded, so the principal remains constant.

Q3: Are there tax implications for monthly interest income?
A: Yes, monthly interest payouts are typically subject to income tax in the year they are received.

Q4: Can I change from monthly payout to cumulative option mid-tenure?
A: Generally, FD terms including payout frequency cannot be changed once the deposit is made.

Q5: How accurate is this simple interest calculation?
A: This calculation provides a close approximation, though actual bank calculations may use daily compounding for greater precision.