How to calculate FD ?

Fixed Deposit (FD) is one of the safest ways to save money in India. You deposit a lump sum for a fixed period, and at maturity, you receive the amount plus interest. Since FDs offer guaranteed returns, they are ideal for risk-free investing. To know your exact returns, you must understand how to calculate FD interest. In this guide, we explain the FD calculation formula, show examples, and why using an FD Calculator online makes it simple.

Overview of FD Calculation

FD Calculation Formula

FD interest is calculated in two ways: Simple Interest and Compound Interest.

1. Simple Interest FD

SI = (P × R × T) ÷ 100
Maturity Amount = P + SI

• P = Principal (amount deposited)
• R = Rate of interest (per annum)
• T = Tenure (in years)

2. Compound Interest FD

A = P × (1 + r/n)^n×t
Interest Earned = A − P

• A = Maturity Amount
• P = Principal
• r = Annual interest rate (in decimal)
• n = Number of times interest is compounded per year (quarterly, half-yearly, annually)
• t = Time in years

Examples of FD Calculation

Case 1: Simple Interest FD

Principal = ₹1,00,000
Rate = 6% p.a.
Tenure = 3 years
SI = (1,00,000 × 6 × 3) ÷ 100 = ₹18,000
Maturity Amount = ₹1,18,000

Case 2: Compound Interest FD (Annual Compounding)

Principal = ₹1,00,000
Rate = 6% p.a.
Tenure = 3 years
A = 1,00,000 × (1 + 0.06/1)^1×3 = ₹1,19,101
Interest Earned = ₹19,101

Case 3: Compound Interest FD (Quarterly Compounding)

Principal = ₹1,00,000
Rate = 6% p.a.
Tenure = 3 years
A = 1,00,000 × (1 + 0.06/4)^4×3 = ₹1,19,267
Interest Earned = ₹19,267

FD Calculation Table (for ₹1,00,000 at 6% p.a.)

Cumulative vs Non-Cumulative FDs

• Cumulative FD: Interest is compounded and paid at maturity along with principal. Suitable for long-term wealth creation.
• Non-Cumulative FD: Interest is paid out monthly, quarterly, half-yearly, or annually. Suitable for those who want regular income.

Why Use an FD Calculator?

Manually calculating FD returns, especially with compounding, can be confusing. An FD Calculator Tool helps by:

• Showing maturity amount instantly
• Handling different compounding frequencies (quarterly, annual, etc.)
• Comparing FD offers across banks
• Saving time and avoiding errors

Try our Free FD Calculator Tool to calculate FD returns instantly.

Key Points to Remember while calculating FD

• FD interest rates vary between banks and tenures – check before investing.
• Senior citizens usually get 0.25%–0.75% higher interest rates.
• Premature withdrawal may reduce returns due to penalties.
• FD interest above ₹40,000 (₹50,000 for senior citizens) in a year is subject to TDS.

FAQs on FD Calculation

Q1. How do I calculate FD maturity?
Use the formula for simple or compound interest depending on FD type. Since most FDs are compounded, an online FD calculator is the easiest way to know your maturity value.

Q2. Which is better – simple or compound FD?
Compound FDs give higher returns because interest is reinvested periodically. Simple interest FDs are rare and usually for very short tenures.

Q3. How often is FD interest compounded?
It depends on the bank. Most banks compound quarterly, but some may offer half-yearly or annual compounding. The frequency affects your maturity value.

Q4. Is FD interest taxable?
Yes, FD interest is fully taxable as “Income from Other Sources.” Banks also deduct TDS if interest crosses the annual limit.

Q5. Can I get monthly income from FD?
Yes, by choosing a non-cumulative FD. The bank will pay interest monthly, quarterly, or annually instead of adding it to maturity.

Q6. How do senior citizen FDs work?
Senior citizens usually get higher FD rates, often 0.25%–0.75% above regular rates. This helps them earn better returns and regular income post-retirement.

Fixed Deposits are safe and reliable investments for those who want guaranteed returns. By learning how to calculate FD interest using simple and compound formulas, you can estimate maturity amounts accurately. For quick and error-free results, always use an FD Calculator online to compare options and make the best investment decision.