Interest Calculator India FD

Fixed Deposit Formula:

\[ A = P \times (1 + r/n)^{n \times t} \]

Principal Amount (P):

₹

Annual Interest Rate (r):

Compounding Periods per Year (n):

Time Period (t):

years

Future Value (A):

Interest Earned:

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1. What is Fixed Deposit Interest Calculation?

Fixed Deposit (FD) interest calculation determines the future value of an investment based on principal amount, interest rate, compounding frequency, and time period. It helps investors understand how their money will grow over time in a fixed deposit account.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ A = P \times (1 + r/n)^{n \times t} \]

Where:

\( A \) — Future value of the investment
\( P \) — Principal amount (initial investment)
\( r \) — Annual interest rate (in decimal form)
\( n \) — Number of compounding periods per year
\( t \) — Time period in years

Explanation: The formula calculates how much your investment will be worth after compound interest is applied over the specified time period.

3. Importance of FD Interest Calculation

Details: Understanding compound interest helps investors make informed decisions about fixed deposit investments, compare different FD schemes, and plan their financial future effectively.

4. Using the Calculator

Tips: Enter the principal amount in rupees, annual interest rate as a percentage, select compounding frequency, and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (monthly vs annually) results in higher returns due to interest being calculated on previously earned interest more often.

Q3: Are FD interest rates fixed?
A: Yes, fixed deposit interest rates are predetermined and remain constant for the entire tenure of the deposit.

Q4: What is the TDS on FD interest?
A: In India, TDS (Tax Deducted at Source) is applicable on FD interest if it exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.

Q5: Can I withdraw my FD before maturity?
A: Yes, but premature withdrawal usually attracts a penalty and may result in a lower interest rate than originally agreed.