1. What is Quarterly Compounding?

Quarterly compounding means that interest is calculated and added to the principal amount four times per year. This results in higher returns compared to simple interest or annual compounding due to the effect of earning interest on previously earned interest.

2. How Does the Calculator Work?

The calculator uses the quarterly compounding formula:

Where:

• \( A \) — Maturity amount (₹)
• \( P \) — Principal amount (₹)
• \( R \) — Annual interest rate (%)
• \( T \) — Time period (years)

Explanation: The formula calculates how much your investment will grow when interest is compounded quarterly, accounting for interest earned on both the principal and accumulated interest.

3. Importance of Compound Interest

Details: Compound interest is a powerful financial concept that allows your money to grow exponentially over time. The more frequently interest is compounded, the faster your investment grows, making it crucial for long-term wealth creation.

4. Using the Calculator

Tips: Enter the principal amount in ₹, annual interest rate in percentage, and time period in years. All values must be positive numbers to get accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between quarterly and annual compounding?
A: Quarterly compounding calculates interest four times per year, while annual compounding calculates once per year. Quarterly compounding yields higher returns due to more frequent interest calculations.

Q2: Are SBI FD interest rates fixed or variable?
A: SBI offers both fixed and floating rate FDs. Fixed rates remain constant throughout the tenure, while floating rates may change based on market conditions.

Q3: What is the minimum investment for SBI FDs?
A: The minimum investment amount for SBI fixed deposits is typically ₹1,000, with no maximum limit for regular FDs.

Q4: Are there penalties for premature withdrawal?
A: Yes, SBI charges a penalty for premature withdrawal of FDs, typically 0.5-1% lower than the contracted rate, depending on the tenure.

Q5: Are SBI FDs taxable?
A: Yes, interest earned on SBI FDs is taxable under Income Tax Act, 1961. TDS is deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.