What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a financial instrument provided by banks or NBFCs where investors can deposit money for a fixed tenure at a predetermined interest rate. It is considered a safe investment with guaranteed returns.
How does the FD calculator work?
The FD calculator uses the following details to calculate the maturity amount:
- Principal amount (initial investment)
- Interest rate (per annum)
- Time period (tenure in months or years)
- Compounding frequency (monthly/quarterly/half-yearly/annually)
It applies the compound interest formula to compute the maturity amount and total interest earned.
What is the formula used for FD calculation?
The formula for compound interest is:
- A = P × (1 + r/n)^(n × t)
Where:
- A = Maturity amount
- P = Principal amount
- r = Annual interest rate (in decimal)
- n = Number of times interest is compounded per year
- t = Time (in years)
What is compounding frequency?
Compounding frequency is how often the interest is added to your FD. Common options include:
- Monthly
- Quarterly
- Half-Yearly
- Annually
More frequent compounding results in higher returns.
Is the interest earned from FD taxable?
Yes. Interest earned on FDs is fully taxable under the head "Income from Other Sources" as per your income tax slab. Banks may also deduct TDS (Tax Deducted at Source) if the interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.
What is the minimum and maximum FD tenure?
- Minimum: 7 days (varies by bank)
- Maximum: 10 years
Can I break my FD before maturity?
Yes, most banks allow premature withdrawal of FDs, but it may incur a penalty or lower interest rate than agreed.
Is the maturity amount guaranteed?
Yes, the maturity amount is guaranteed for FDs. However, it's important to ensure you invest with a reliable bank or NBFC.
Can senior citizens get a higher interest rate?
Yes, most banks offer an additional 0.25% to 0.50% interest to senior citizens (age 60+).
Does the calculator show the exact amount I will get?
The calculator gives an approximate maturity amount based on the entered inputs. Actual returns may vary slightly based on the bank’s policy and actual compounding dates.