Home
Back
Fixed Deposit Interest Formula:
| From: | To: |
Fixed Deposit (FD) interest calculation in India typically uses quarterly compounding, where interest is calculated and added to the principal every three months. This method helps investors earn interest on interest, maximizing returns over time.
The calculator uses the quarterly compounding formula:
Where:
Explanation: The formula calculates the maturity amount when interest is compounded quarterly (4 times per year), which is the standard compounding frequency for most bank FDs in India.
Details: Accurate FD interest calculation helps investors plan their savings, compare different FD schemes, and make informed investment decisions to maximize returns while ensuring capital safety.
Tips: Enter principal amount in rupees, annual interest rate in percentage, and time period in years. All values must be positive numbers.
Q1: Why quarterly compounding for FDs in India?
A: Most Indian banks use quarterly compounding for fixed deposits as it provides better returns compared to annual compounding while maintaining simplicity.
Q2: Are FD interest rates fixed for entire tenure?
A: Yes, in fixed deposits, the interest rate is locked at the time of investment and remains constant throughout the tenure.
Q3: What is TDS on FD interest?
A: Banks deduct TDS (Tax Deducted at Source) at 10% on FD interest if it exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.
Q4: Can I withdraw FD before maturity?
A: Yes, but premature withdrawal usually attracts penalty charges and the interest rate may be reduced to the rate applicable for the period the FD was held.
Q5: Are FDs safe investments?
A: Yes, bank FDs are considered safe as they are insured up to ₹5 lakh per depositor per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme.