Fixed Deposit Calculator
Calculate the maturity value and interest earned on your Fixed Deposit (FD) investment based on compounding frequency.
Understanding Fixed Deposits (FD)
A Fixed Deposit (FD) is a financial instrument provided by banks and non-banking financial companies (NBFCs) which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It is one of the safest and most popular investment options in India.
Compounding Frequency Matters
The interest on a fixed deposit can be calculated on a simple or compound basis. Most banks compound interest quarterly, meaning the interest earned in one quarter is added to the principal to calculate the interest for the next quarter. The more frequent the compounding (e.g., monthly vs. yearly), the higher the maturity value.
Worked Example
- Principal Amount: ₹1,00,000
- Interest Rate: 6.5% p.a.
- Duration: 12 Months (1 Year)
- Compounding: Quarterly
- Maturity Value: ₹1,06,660. The total interest earned is ₹6,660. Notice how this is slightly higher than a simple 6.5% flat interest (which would be exactly ₹6,500) due to quarterly compounding.
Frequently Asked Questions
Is FD interest taxable?
Yes, the interest earned on fixed deposits is fully taxable according to your income tax slab. Banks will deduct TDS (Tax Deducted at Source) at 10% if the interest exceeds ₹40,000 in a year (₹50,000 for senior citizens).
Can I withdraw my FD before maturity?
Yes, most banks allow premature withdrawal of FDs, but they usually charge a penalty (typically 0.5% to 1% reduction in the applicable interest rate).
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.