# Fixed Deposit (FD) Calculator

Enter all values to calculate:

## What is Fixed Deposit?

A Fixed deposit holds money for a fixed period of time. Upon maturity, the money is returned to the investors in principle + the interest (earned on the principle)

A fixed deposit is an investment scheme provided by banks and other financing companies.

The return of investment on Fixed Deposits (FD) is comparatively higher than regular savings account.

The rate of interest is mostly predetermined in fixed deposits.

The tenure for FD is fixed as per investor’s convenience.

Investment period for FD can either be short-term or long-term.

Since FD have a fixed tenure, penalty is applicable on early withdrawal.

## How is interest on FD calculated?

Simple interest is calculated for short term fixed deposit and is considered on number of days.

Compound interest is calculated for fixed deposits above 6 months of tenure. i.e. interest earned for previous compounding period is added to the principal amount for further interest calculation.

For interest payout options, the interest is calculated on principal for selected period (monthly, quarterly, etc.) and is paid at the end of every period.

## FD calculation formula:

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

Where,

A= Maturity amount.

P= Principal amount.

r= Rate of Interest.

t= Tenure in years.

n= Compounding frequency.

Let’s consider an example to understand this better,

You invest a principal amount of 5000 for a period of 5 years at an interest rate of 5% and it is compounded quarterly (so, n=4).

A= 5000 x {[1+(0.05/4)]^(4*5)}

A= 5000 x 1.2820

A= 6410.19

Maturity amount in this case at the end of 5 years will be 6410.19.

## Interest paid by banks in India (2020):

 Banks / Financial companies Normal Interest Rates Senior Citizen Interest less than 5 Years More than 5 Years less than 5 Years More than 5 Years State Bank of India 5.30% 5.40% 5.80% 6.20% AXIS Bank 5.50% 5.50% 6.00% 6.00% ICICI Bank 5.50% 5.50% 6.00% 6.30% HDFC Bank 5.35% 5.50% 5.85% 6.26% Union Bank of India 5.45% 5.45% 5.95% 5.95% IDBI Bank 5.40% 5.40% 6.00% 5.90% UCO Bank 5.20% 5.20% 5.70% 5.70% Syndicate Bank 5.30% 5.30% 5.80% 5.80% Kotak Mahindra  Bank 4.75% 4.75% 4.50% 4.50% Yes Bank 6.50% 6.75% 7.00% 7.25% Federal Bank 5.50% 5.60% 6.00% 6.10% IndusInd Bank 7.68% 7.81% 8.32% 8.50% Punjab National Bank 5.25% 5.30% 6.00% 6.05% Bank of Baroda 5.30% 5.30% 5.80% 6.30% Bank of India 5.25% 5.25% 6.00% 6.00% Bank of Maharashtra 5.00% 5.00% 5.50% 5.50% Indian Overseas Bank 5.60% 5.70% 6.10% 6.20% IDFC Bank 6.75% 6.75% 7.25% 7.25%

Note: Please refer to the respective bank websites and confirm the interest rates before investing. The above chart is updated in August 2020.

## Popular Fixed Deposit types:

Standard FD: Principal amount is invested for a fixed tenure at a fixed rate of interest. On maturity, investor receives principal amount along with interest earned during the period of fixed deposit.

Senior Citizen FD: Offered to citizen above 60 years of age, this type of fixed deposit earns higher rate of interest as compared to standard fixed deposit.

Cumulative FD: Interest rate in this type of fixed deposit is compounded monthly, quarterly, half-yearly, or yearly. However, the total earning is paid at the time of maturity. This type of FD provides high return on investment.

Non-Cumulative FD: Interest earned in this type of fixed deposit is paid out monthly, quarterly, or half-yearly. This is an easy option for investors looking for a regular income source.

Tax Saving fixed deposit: An Individual can get tax exemption up to  1,50,000 /- in a year. These kinds of fixed deposits have a lock-in period of 5 years.

Flexi fixed Deposit: These fixed deposits are linked to your savings account. A limit has to be set on savings accounts. Once the limit exceeds, the amount gets transferred to the fixed deposit.

## Benefits of Fixed Deposit:

Relatively safe investment option.

Stable return of investment

Can be used as a regular source of income.

It gives guaranteed return.

Assured rate on which interest can be earned.

Can be used as a tax saving option.

Loans can be availed against Fixed deposits up to 80 to 90 percent of the value of deposits.

Higher interest rate can be earned as compared to depositing money in a savings account.

Easy to liquidate your money. (with some charges / penalty before tenure)

## Limitations of Fixed Deposit:

Low liquidity as terms are offered for a fixed tenure.

Possible penalty on withdrawal before maturity period.

No Flexibility to access your funds. As the money is locked for a specific period of time (Months/Years)

From the last few years it has been observed that the interest rates are reducing.

Taxes have to be paid for the interest charged.

## Eligibility:

Indian resident, Non-Resident Indian (NRI), Senior Citizen, Minors, Sole proprietorship, Partnership firms, Companies, Societies, Clubs.

## Documents required to open a fixed deposit:

Identity Proof:

Driving licence

Passport

Government ID card

PAN card

Photo ration card

Senior citizen ID card

Voter ID card

Passport

Telephone bill

Electricity bill

Bank Statement with Cheque

Certificate/ ID card issued by Post office

## Penalty on early withdrawal:

Penalty / Charges vary from bank to bank. However, it is observed that 1% of agreed upon interest rate is charged when withdrawing early.

## Conclusion on Fixed Deposit:

It is a perfect investment for beginners.

Since it is a risk free investment, Individuals can greatly benefit from this scheme.

It does not require much time and effort and does offer assured returns.

It does offer no risk of losing principal amount.