Plan FD Calculator

FD Calculator - Calculate Return & Interest On Your Fixed Deposit

FD Calculator to Calculate the Return and Fixed Deposit Interest Rates on your investment. Input your investment amount, FD Period & Interest Rate to know your mature amount.

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INITIAL INVESTMENT

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WEALTH GAINED

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MATURITY VALUE

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What is FD Calculator?

A fixed deposit (FD) is a financial instrument provided by banks and NBFCs. The rate of interest of an FD is higher than the rate of interest of a savings bank account.

The interest earned on FD is either paid at regular intervals to an investor or paid at maturity, as opted by an investor. A separate bank account is not required to invest in an FD.

How to use the Fixed Deposit Calculator?

To use the fixed deposit calculator, the below information is required.

  1. Deposit amount
  2. Rate of interest
  3. Tenure of investment in months or years

Enter this information in the calculator and click on the ‘Calculate’ button. Post this an investor will be shown the principal amount invested, interest earned and maturity amount.

An investor can also click on the ‘Reset’ button to start the calculation afresh.

Fixed Deposit Calculation Formula

The interest on fixed deposit is calculated by two methods, simple interest, and compound interest.

We have explained the calculation formula through both the methods below.

Simple Interest

Simple interest is the interest earned on the principal amount invested at the pre-determined rate of interest during the investment tenure.

Formula for calculation

Simple Interest = (P * R * T)/ 100

P- Principal amount invested

R- Rate of interest (%)

T- Tenure

Example

Mr. Arun invested Rs 100,000 for 10 years at an interest rate of 5% per annum.
Simple Interest = (Rs 100,000 * 5 * 10 years)/ 100 = Rs 50000

Maturity Amount = Principal amount + Simple Interest

Rs 100,000 + Rs 50,000

Rs 150,000

Compound Interest

Compound interest is the interest earned on the principal amount invested and the interest earned. The interest rate is raised to the number of periods (years) for which the interest will be compounded and multiplied to the principal amount invested.

Formula for calculation

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

A = Maturity Amount
P = Principal amount invested
r = Rate of Interest (in decimals)
n = number of compounding in a year
t = number of years

Example

Mr. Arun invested Rs 1,00,000 for 10 years at an interest rate of 5% per annum compounded quarterly

A = 1,00,000 (1+0.05/4) ^ (4*10)
A = 1,64,361

Interest amount = 1,64,361 - 1,00,000

Rs 64,361

Comparison of Mutual Funds Returns with Fixed Deposit Returns

Mutual funds and fixed deposits are both good investment options for an investor. Below is a table reflecting the differences between the two options:

Particulars Fixed Deposit Mutual Funds
Meaning A type of deposit made with a bank wherein investor puts a specified sum of money for a fixed tenure. The investment made by different investors is pooled together and invested in shares, stocks, instruments, bonds.
Returns The rate of interest is pre-determined and guaranteed over a specific period of time The returns are dependent on the market fluctuations and performance of the mutual fund in the market in case of equity funds.
Risk Risk is zero as the investor will get a guaranteed return. This guarantee is also backed by DICGC, a subsidiary of RBI The risk involved varies from fund to fund and is influenced by the market (in case of equity funds). Risk also depends on the investor and his earning v/s cost of living.
Expenses No expense from the creation of FD till maturity Mutual fund carries fund management charges and expenses
Withdrawal It cannot be liquidated before the maturity period. Penalty applicable for premature withdrawal It can be withdrawn free of charge after the lock-in period. Premature withdrawal is allowed with charges of 1% in the form of exit load.
Tax Implication Principal amount- Allowed as a deduction (tenure is greater than 5 years) Interest Amount- Taxable Interest greater than Rs 10000- TDS deductible @ 10% STCG- Flat rate of 15% LTCG less than Rs 1 lakh- Tax-free LTCG more than Rs 1 lakh- Taxable @ 10% LTCG on Debt funds- Taxable at 20% post indexation

Benefits of Fixed Deposit

Higher interest rate

The interest rate on a fixed deposit is higher than the interest rate offered on savings account deposits. The interest rate is higher for a longer tenure of investment

Guaranteed returns

The returns on a fixed deposit are predefined and is considered guaranteed, this interest does not depend on any market fluctuations. At the time of making the deposit, an investor is well aware of the maturity amount to be expected.

This is the reason why an investor may consider investing a part of his investment in a fixed deposit.

Tax Benefit

The principal amount invested in a 5 year tax saver fixed deposit is allowed as a deduction under section 80C up to Rs 1,50,000. The interest earned is taxable.

Flexibility of tenure

The tenure on a fixed deposit is flexible. An investor can select any tenure ranging from 7 days to 10 years. An investor can invest in multiple fixed deposits with different tenures with the same bank or different bank.

Hence, an investor can invest in fixed deposit for the tenure that suits his/ her liquidity and investment goal

Liquidity

An investment is liquid when it can be easily converted into cash. In case of emergencies or otherwise, an investor is free to withdraw the investment. A small penalty fee will be levied and the balance amount will be credited to his bank account.

Alternatively, an investor can avail of a loan against the fixed deposit.

Avail a loan

An investor can avail of a loan against a fixed deposit in case of emergencies. A loan can be availed up to 90% of the principal amount invested

An investor will earn interest on the fixed deposit and pay interest on the loan. Hence, effectively an investor will get a hit of the balance of these two interests.

Disadvantages of Fixed Deposit

Tenure of deposit

The investment is made for a fixed tenure at a predefined rate. So the interest rate will not change with changes in market and inflation. An investor might end up with a lower return due to inflation.

An investor can then choose to invest for a shorter duration, but a duration less than 5 years will not attract tax benefit u/s 80C.

Tax on interest earned

The principal amount is allowed as a deduction but the interest earned is taxable. The interest earned is taxable as per the income tax slab rate applicable to an investor.

If the interest earned is greater than Rs 10,000 TDS @ 10% will be deducted. This lower the interest amount credit in-hand for an investor.

Penalty for premature withdrawal

Before investing, an investor must be sure about the tenure of investment and liquidity position during the investment tenure. A premature withdrawal attracts a penalty and lowers interest.

Hence, an investor can invest for a shorter duration and keep reinvesting. But doing this will not give an investor tax benefit u/s 80C.

Comparison of Tax Saving Fixed Deposit with ELSS Funds

ELSS and fixed deposits are both good investment options for an investor.. Below is a table reflecting the differences between the two options:

Particulars Fixed Deposit Elss
Meaning A type of deposit made with a bank wherein investor puts a specified sum of money for a fixed tenure. A category of mutual funds in which funds are invested in the equity market.
Returns Fixed return as per the rates offered by the bank Dependent on the market conditions and returns vary as per the performance of the market.
Liquidity It cannot be liquidated before the maturity period. Penalty applicable for premature withdrawal It cannot be liquidated before the specified period of 3 years.
Tax Implication Principal amount- Allowed as a deduction (tenure is greater than 5 years)Interest Amount- Taxable Capital Gain less than Rs 1 lakh- Tax-free Capital Gain more than Rs 1 lakh- Taxable @ 10%
Lock-in period Normal FD- Tenure of investment Tax Saving FD-5 years 3 years

Insurance on Fixed Deposit

An investor might consider the risk of a bank closing down and the risk of losing the entire invested amount.

Every bank secures all the deposits made by account holders and investors including savings, fixed and recurring deposits. The bank deposits are secured by Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India.

The deposit insurance scheme covers private banks, public sector banks and co-operative banks

The deposit guarantee can be released only in the event of the failure of a bank. This deposit guarantee covers Rs 5 lakh including principal amount and interest earned.

All the deposits and interest in any branch are clubbed together and up to Rs 5 lakhs repaid to the investor in the event of failure.

Loan on Fixed Deposit

A fixed deposit as a collateral

One such source is keeping a fixed deposit as collateral and taking a loan against it rather than paying a penalty and breaking an FD

Since the loan is taken against a collateral i.e FD, it is a secured loan and hence the rate of interest is lower than a personal loan and other types of loans

Eligibility for availing loan

  1. Loan can be availed by an individual investor or those with joints accounts.
  2. Loan cannot be availed against a tax-saving fixed deposit.
  3. A fixed deposit in the name of a minor does not qualify for a loan.
  4. The benefit of availing a loan against an FD is listed below

    1. No processing fee.
    2. Quick loan disbursal.
    3. Lower rate of interest compared to personal loan interest rate.
    4. Loan available against domestic FD and NRI FD.
    5. It can be repaid in lump sum or installment but before the expiry of FD tenure.

Frequently Asked Questions on Fixed Deposit

Who should invest in a fixed deposit?

Anyone who wants to get a fixed return at a minimum risk can invest in fixed deposit. An investment in a tax-saving fixed deposit allows tax deduction up to Rs. 1,50,000 under section 80C of the income tax act.

What is the lock-in period of a tax-saving fixed deposit?

Tax-saving fixed deposits have a lock-in period of 5 years. No premature withdrawals are allowed.

Who can invest in a tax-saving fixed deposit?

Indian citizens, senior citizens, Hindu Undivided Family(HUF) can invest in a tax-saving fixed deposit

What is the maximum and minimum amount to invest in a fixed deposit?

The maximum and minimum amount to invest in a fixed deposit varies from one bank to another. However, if an investor wishes to invest above Rs 1 crore, he may ask for a customized rate of interest from the bank.

What is the maximum and minimum tenure to invest in a fixed deposit?

The customers can choose to invest their money for a minimum period of 7 days up to a maximum tenure of 10 years.

Are there any additional benefits of investing in the case of senior citizens?

Investments done by senior citizens are offered a higher rate of returns than whatever is fixed for a regular fixed deposit.