Federal Bank Fixed Deposit offers investors high-interest rates at minimum risk. Following are some of the key features of a Federal Bank fixed deposit account:
Federal Bank FD Calculator is a simple online tool that helps in estimating the returns from an FD investment. Furthermore, FD calculator only requires simple inputs like investment amount, target amount, investment duration in years and interest rate. The output Federal Bank FD calculator provides aids in better financial planning.
However, one must understand that the Federal Bank FD Calculator only provides an estimation and doesn’t guarantee any returns. Also, the actual return might vary, and the exact maturity amount will be known only after one invested in Federal Bank FD.
Estimating potential returns is the first step towards making informed investment decisions. Also, knowing the potential returns along return percentage will help in understanding how much one can expect at the end of their investment tenure. There are two ways one can estimate the returns from FD investment using Scripbox Federal Bank FD Calculator: investment amount approach and target amount approach.
Following are steps that you can follow to use the Federal Bank FD Calculator using the Investment Amount Approach:
After all the inputs are entered, the Federal Bank FD calculator automatically computes the interest and maturity amount. In the tabular format, the Federal Bank FD calculator shows the interest earned every year along with the yearly opening and closing balance. Alternatively, the graphical representation shows the growth of Federal bank FD investment over time (initial investment and maturity amount).
The target amount approach helps determine the amount that one should invest today to achieve their target amount on maturity from the Federal Bank FD investment. Following are the steps that one needs to follow to use the Federal Bank FD Calculator using the Target Amount Approach:
The Federal Bank FD calculator estimates the investment amount needed to achieve the target and estimates the interest one might earn. Moreover, the Federal Bank FD Calculator shows a tabular representation of opening balance, interest earned and closing balance for each year.
Following are the benefits of using Federal Bank FD Calculator:
The interest amount from Federal Bank 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 earned from Federal Bank FD using two methods: simple interest and compound interest. Let us understand the interest and maturity amount calculation using both methods with the help of an example.
Simple interest is the income that one earns for investing money for a predetermined period at a fixed interest rate.
Simple Interest = (P * R * T)/ 100
P- Principal amount, R- Interest rate of Federal Bank FD (%), T- Tenure of the Federal Bank FD
Mr Viraj wants to invest INR 25,000 for 4 years at an interest rate of 5.35% per annum.
For Mr Viraj, the principal amount (P) is INR 25,000, rate of interest (R) is 5.35%, and tenure (T) is 4 years.
Simple Interest = (INR 25,000 * 5.35 * 4 years)/ 100 = INR 5,350
Maturity Value = Investment + Simple Interest earned during the tenure of investment
Maturity Value = INR 25,000 + INR 5,350
Maturity Value = INR 30,350
Compound interest is the income that the investor earns on the investment amount and interest. One can earn interest on interest through the power of compounding. As a result, compounding is a powerful concept. The interest income from an investment will be higher when the number of compounding periods in a year is more. This, coupled with no interest payouts, will increase the wealth gained from an investment.
A = P (1+r/n) ^ (n * t)
A = Maturity amount, P = Principal Investment, r = Rate of interest (in decimals), n = number of times interest is compounded, t = tenure in years
Mr Viraj wants to invest INR 25,000 for four years at an interest rate of 5.35% per annum, compounded quarterly.
For Mr Viraj, the principal amount (P) is INR 25,000, rate of interest (r) is 5.35%, tenure (t) is four years, and the number of compounding periods is 4 (n)
Maturity Amount = 25,000 (1+0.0535/4) ^ (4*4)
A (maturity amount) = INR 30,921.67
Interest income = INR 30,921.67 – INR 25,000 = INR 5,921.67
The Federal Bank fixed deposit interest rate ranges between 2.5% to 5.5% p.a. Also, Federal Bank offers preferential interest rates for senior citizen depositors, ranging between 3% to 6%.
The highest FD rate for Federal Bank is 5.5% for a regular investor for the tenure of 5 years and above. Also, for senior citizens, the highest Federal Bank FD interest rate is 6%.
The Deposit Insurance Scheme insures the Federal Bank deposits up to INR 5,00,000. Hence Federal Bank fixed deposits are considered safe.
Federal Bank provides its depositors with a facility to avail a loan up to 90% of the deposit against their FDs. The bank provides loans only against fixed deposits and cash certificates. A loan against the FD not only allows investors to meet their financial gaps and but also helps in meeting liquidity requirements without breaking Federal Bank FD.
The Federal Bank allows its investors to withdraw the deposit amount prematurely. However, the Federal Bank charges a penalty of 1% on the contracted interest rate for premature withdrawal. The terms and conditions of premature withdrawal vary as per the norms of the Federal Bank.
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