Bank of Baroda Fixed Deposit offers investors high interest rates at minimum risk. Following are some of the key features of a Bank of Baroda fixed deposit account:
Bank of Baroda FD Calculator is a simple online tool that helps in estimating the returns from an FD investment. The FD calculator only requires simple inputs like investment amount, target amount, rate of interest, and duration in years. The output of the Bank of Baroda FD calculator aids in better financial planning.
However, one must understand that the Bank of Baroda FD Calculator only provides an estimation and doesn’t guarantee any returns. The actual return might vary, and the exact maturity amount will be known only after one invested in Bank of Baroda FD.
It’s a good idea to estimate the prospective returns before making an investment decision. As a result, better investment planning is possible. In other words, assessing returns in terms of wealth gained instead of a percentage allows people to manage their financial goals in a better way. There are two ways one can estimate the returns from FD investment using Scripbox Bank of Baroda FD Calculator: investment amount approach and target amount approach.
Following are steps that you can follow to use the Bank of Baroda FD Calculator using the Investment Amount Approach:
After all the inputs are entered, the Bank of Baroda FD calculator automatically shows the interest and maturity amount. The Bank of Baroda FD calculator shows a tabular format of the interest earned each year along with the opening and closing balance. Moreover, the Bank of Baroda FD calculator gives a graphical representation of the initial investment and maturity amount.
While the investment amount approach requires an individual to enter the investment amount, the target amount approach estimates the investment amount based on the amount one expects from the Bank of Baroda FD investment. Following are the steps that one needs to follow to use the Bank of Baroda FD Calculator using the Target Amount Approach:
The Bank of Baroda FD calculator gives the investment amount needed to achieve the target and estimates the interest one might earn. Moreover, the Bank of Baroda FD Calculator shows a tabular representation of opening balance, interest earned and closing balance for each year.
The interest amount from Bank of Baroda FD investment depends on a number of factors such as investment amount, tenure of the FD, compounding frequency, and the rate of interest. One can estimate the interest using two methods, namely, simple interest and compound interest. Let us understand the interest calculation using both the methods with the help of an example.
Simple interest on a fixed deposit is the wealth gained for a predetermined period at a fixed interest rate. Also, the interest amount will be the same throughout the investment tenure.
Simple Interest = (P * R * T)/ 100
P- Amount of investment, R- Interest rate of Bank of Baroda FD (%), T- Tenure of the Bank of Baroda FD
Ms Akhila wants to invest INR 20,000 for 5 years at an interest rate of 6.5% per annum.
For Ms Akhila, the principal amount (P) is INR 20,000, rate of interest (R) is 6.5%, and tenure (T) is 5 years.
Simple Interest = (INR 20,000 * 6.5 * 5 years)/ 100 = INR 6,500
Maturity Value = Investment + Simple Interest earned during the tenure
Maturity Value = INR 20,000 + INR 6,500
Maturity Value = INR 26,500
Compound interest is the interest on the principal plus the interest accumulated so far. In other words, compounding means earning interest on interest. The duration of the investment, the number of compounding periods, and interest payout frequency affect the wealth gained from the investment. Higher the duration of investment, higher number of compounding periods, and low interest payout frequency will increase the interest income. Bank of Baroda fixed deposit interest is compounded every quarter.
A = P (1+r/n) ^ (n * t)
A = Value of the investment at maturity, P = Initial investment amount, r = Interest (in decimals), n = compounding periods in a year, t = investment duration in years
Ms Akhila wants to invest INR 20,000 for five years at an interest rate of 6.5% per annum, compounded half-yearly.
For Ms Akhila, the principal amount (P) is INR 20,000, rate of interest (r) is 6.5%, tenure (t) is five years, and the number of compounding periods is 2 (n)
Maturity Amount = 20,000 (1+0.065/2) ^ (2*5)
A (maturity amount) = INR 27,537.88
Interest income = INR 27,537.88 – INR 20,000 = INR 7,537.88
The Bank of Baroda fixed deposit interest rate ranges between 2.9% to 5.3% p.a. Also, the Bank of Baroda offers preferential interest rates for senior citizen depositors. The BoB FD rates for senior citizens range between 3.4% to 6.3%.
The highest FD rate for BoB is 5.3% for a regular investor for the tenure of 3-10 years. Also, for senior citizens, the highest FD interest rate is 6.3%.
The Deposit Insurance Scheme insures the Bank of Baroda deposits up to INR 5,00,000, hence Bank of Baroda FDs are safe.
To know in how many years BoB FD will double, we can follow the 72 rule. We have to divide 72 by the interest rate, and the result will be the number of years Bank of Baroda FD will double. For example, for a tenure of 5-10 years, the Bank of Baroda FD interest rate is 5.25%. An investor can double the investment amount by investing for this tenure in Bank of Baroda FD in 13.71 years (72/5.25).
BoB provides its depositors with a facility to avail a loan against their FDs up to 90%-95% of the deposit amount. A loan against the FD not only allows investors to meet their financial gaps but also helps in meeting liquidity requirements without breaking BoB FD. The terms and conditions of the loan vary as per Bank of Baroda norms.
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