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Fixed Deposit Formula (Quarterly Compounding):
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Fixed Deposit (FD) is a financial instrument offered by banks in India that provides investors with a higher interest rate than regular savings accounts. The interest is compounded quarterly, allowing your money to grow faster through the power of compounding.
The calculator uses the quarterly compounding formula:
Where:
Explanation: The formula calculates the maturity amount when interest is compounded quarterly, meaning the interest is calculated and added to the principal four times per year.
Details: Accurate FD interest calculation helps investors plan their investments, compare different bank offerings, and understand the potential returns on their fixed deposits in the Indian banking system.
Tips: Enter the principal amount in Indian Rupees, annual interest rate in percentage, and time period in years. All values must be positive numbers.
Q1: What is the difference between quarterly and annual compounding?
A: Quarterly compounding calculates interest four times per year, which results in higher returns compared to annual compounding due to the compounding effect.
Q2: Are FD interest rates fixed throughout the tenure?
A: Yes, in most fixed deposits, the interest rate remains constant for the entire tenure once the deposit is made.
Q3: What is the minimum investment period for FDs in India?
A: The minimum tenure for fixed deposits varies by bank but typically starts from 7 days to 10 years.
Q4: Are fixed deposits taxable in India?
A: Yes, interest earned from fixed deposits is taxable under Income Tax Act, and TDS is deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens) per financial year.
Q5: Can I withdraw my FD before maturity?
A: Yes, but premature withdrawal usually attracts a penalty and you may get a lower interest rate than the contracted rate.