FD (Fixed Deposit) is a saving option offered by several banks. It typically offers a higher rate of interest, subject to certain terms and conditions. In a fixed deposit saving scheme, the account holder has to deposit a specific amount for a fixed tenure; against which the bank offers interests. The interest provided by the bank depends on the tenure and the deposit amount.
FD interest calculator is an online tool that helps you determine the interest and the amount that it will accrue at the time of maturity. A fixed deposit interest calculator can be used to calculate the interest you can earn by investing in the FD account for a fixed tenure.
What is FD Interest Calculator?
The FD interest calculator considers the tenure of the deposit, the type of fixed deposit and the rate of interest offered by the bank, to calculate the return value at maturity. It is always recommended by financial experts to use a fixed deposit interest calculator to know the value of your investment before starting investing.
How Does FD Interest Calculator Work?
Fixed Deposit is the safest investment avenue in India. By using the FD interest calculator, the interests can be checked even before investing in a fixed deposit. At the time of calculation, both the simple and compound interest are considered. The invested amount will be calculated with the simple interest where the principle and the subsequent amount are calculated based on the offered compound interest.
FD interest calculator makes it easier for an investor to calculate the maturity amount to be earned. It shows the rate of interest on the basis of certain inputs such as deposit tenure, deposit amount and the offered rate of interest. The current rate of interest offered on bank fixed deposits may range from 3 or 9 per cent, with an extra of 0.5% for senior citizens. However, different banks offer different interest rates. So, with the FD interest calculator, you can get a rough idea of the returns that fulfil your requirements.
Why Should You Use FD Interest Calculator?
FD interest calculator allows you to plan your investment better by calculating the rate of interest. It is also helpful in renewing the deposits. However, the rate of interest is fixed for the entire tenure, it may differ at maturity. Renewal of deposits is done at the prevailing rate of interest at the time of maturity. By using the FD interest calculator, you can also decide whether you should continue with the same scheme or switch to another fixed deposit scheme.
Factors to be Considered While Using FD Interest Calculator
In order to calculate the rate of interest on fixed deposits by using the FD interest calculator, you must consider the following factors.
Deposit Amount
The deposit amount is the amount you invest to open an FD account. The best part of a fixed deposit is that you can invest with a minimum of Rs. 1000.
FD Interest Rate
The rate of interest may vary depending on the fixed deposit tenure and from bank to bank. Also, the different financial institutes offer different ROI.
Deposit Tenure
Deposit tenure is based on the tenure you have chosen for investing your money. However, you will have to invest for a minimum of 1 week to 10 years on fixed deposits.
The Frequency of Compound Interest
It calculates the maturity amount to be earned at the end of the tenure on a monthly, quarterly, or annually basis. It is always calculated on the initial deposit amount.
FD Interest Calculator Formula
FD interest calculator is an online financial tool that allows you to enter deposit details such as the amount to be invested, the tenure of deposit, the offered rate of interest on the chosen FD scheme and the compounding frequency.
To calculate the fixed deposit interest, the following formula has been used.
A = P (1 + r/n) n*t
Where,
- A = Amount to be received
- P = Principal Amount
- r = Rate of Interest
- n = Number of times the interest is compounded per year
- t = Tenure
Conclusion
The rate of interest on fixed deposits is higher than the savings accounts. The interest depends upon the amount to be invested and the tenure of the scheme. As various banks offer various schemes and interests, it is always advisable to compare FD rates through an FD interest calculator online.
