Fixed Deposit Calculator

TOTAL INVESTMENT
INTEREST RATE (% P.A)
TIME PERIOD (YEARS)
Maturity Value
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Total Investment0
Interest Earned0

What is a Fixed Deposit (FD)?

A Fixed Deposit (FD), also known as a Term Deposit, is a secure investment instrument offered by banks and financial institutions. It involves depositing a lump sum amount for a fixed period at a pre-determined interest rate. In return, the investor receives a guaranteed return higher than a regular savings account.

How to Use This Calculator

Calculate your returns in three simple steps:

  • Step 1: Enter the Total Investment amount you wish to deposit.
  • Step 2: Input the Annual Interest Rate offered by your bank.
  • Step 3: Select the Time Period (Tenure) of the deposit in years.

Key Benefits of Fixed Deposits

  • Safety: FDs are considered one of the safest investment options as they are not linked to market fluctuations.
  • Guaranteed Returns: Unlike stocks, you know exactly how much you will earn at the time of investment.
  • Liquidity: Most FDs allow premature withdrawal (often with a small penalty) or loans against the deposit in case of emergencies.

Mathematical Formula

Banks typically calculate FD interest using the compound interest formula:

A = P x (1 + r/n)^(n*t)

Where: A = Maturity Amount, P = Principal Amount, r = Annual Interest Rate (decimal), n = Compounding frequency (e.g., 4 for quarterly), t = Time in years.

Frequently Asked Questions (FAQ)

A Savings Account provides high liquidity but lower interest rates. A Fixed Deposit offers significantly higher interest rates but locks your money for a specific period (tenure).

Compounding means you earn "interest on interest." Most banks compound interest quarterly. This means every 3 months, the interest earned is added to your principal, and future interest is calculated on this increased amount.

Yes, premature withdrawal is usually allowed, but banks typically charge a penalty (e.g., 0.5% to 1%) by reducing the effective interest rate.

In most jurisdictions, interest earned on Fixed Deposits is considered taxable income. Banks may deduct tax at source (TDS) if the interest exceeds a certain threshold set by the government.

In a Cumulative FD, the interest is re-invested (compounded) and paid out only at maturity along with the principal. This option yields the highest returns and is best for wealth creation.

In a Non-Cumulative FD, the interest is paid out to you regularly (monthly, quarterly, or yearly) instead of being reinvested. This is ideal for retirees or those looking for a regular income stream.