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Fixed Deposit Quarterly Compounding Formula:
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Fixed Deposit with quarterly compounding is a popular investment option in India where interest is calculated and added to the principal every three months, leading to higher returns through compound interest.
The calculator uses the quarterly compounding formula:
Where:
Explanation: The formula calculates the total amount you receive at maturity when interest is compounded quarterly, giving you more accurate returns than simple interest calculations.
Details: Accurate FD calculation helps investors plan their finances, compare different investment options, and understand the power of compound interest in wealth creation.
Tips: Enter principal amount in ₹, annual interest rate in %, and time period in years. All values must be positive numbers to get accurate results.
Q1: What are current FD rates in India for 2024?
A: FD rates vary by bank and tenure. Major banks typically offer 6-7% for regular FDs, while small finance banks may offer 7-9% for similar tenures.
Q2: How does quarterly compounding benefit investors?
A: Quarterly compounding means interest is added to principal every 3 months, allowing subsequent interest calculations on a higher amount, resulting in better returns than annual compounding.
Q3: Are FD returns taxable in India?
A: Yes, interest earned from FDs is taxable as per your income tax slab. TDS is deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.
Q4: What is the difference between cumulative and non-cumulative FDs?
A: Cumulative FDs reinvest interest until maturity, while non-cumulative FDs pay out interest periodically (monthly/quarterly/half-yearly/annually).
Q5: Can I break my FD prematurely?
A: Yes, but banks typically charge a penalty of 0.5-1% on the interest rate, and you may get lower returns than the contracted rate.