Fixed Deposits (FDs) are one of the most popular investment options in India. Banks and NBFCs offer FDs with fixed returns, making them a safe choice for risk-averse investors. To know how much you will get at maturity, you need to understand how to calculate Fixed Deposits (FD) interest and maturity amount.
In this guide, we explain the FD calculation formula, show examples of maturity values, and why using an FD Calculator online is the easiest way to estimate your returns.
Overview of FD Calculation
| Factor | Details |
|---|---|
| Minimum Tenure | 7 days |
| Maximum Tenure | 10 years (varies by bank) |
| Interest Type | Simple Interest / Compound Interest |
| Compounding Frequency | Quarterly (most banks), sometimes yearly or monthly |
| Safety | Up to ₹5 lakh insured by DICGC |
| Tax Rules | Interest is taxable; TDS applies if above ₹40,000 (₹50,000 for senior citizens) |
How to Calculate Fixed Deposits (FD) Maturity?
The maturity amount of a fixed deposit depends on:
- Deposit Amount (Principal)
- Rate of Interest (R)
- Tenure of Investment (T)
- Type of Interest – simple or compound
1. FD Simple Interest Formula
SI = (P × R × T) ÷ 100
- P = Principal Amount
- R = Rate of Interest (per annum)
- T = Tenure in years
Maturity = P + SI
2. FD Compound Interest Formula
A = P × (1 + r/n)n × t
- A = Maturity Amount
- P = Principal Amount
- r = Annual Interest Rate (in decimal)
- n = Number of compounding periods in a year
- t = Time (in years)
Interest Earned = A – P
Examples of Fixed Deposits (FD) Calculation
Case 1: Simple Interest FD
Principal = ₹1,00,000
Rate = 6% p.a.
Tenure = 3 yearsSI = (1,00,000 × 6 × 3) ÷ 100 = ₹18,000
Maturity = ₹1,18,000
Case 2: Compound Interest FD (Quarterly)
Principal = ₹1,00,000
Rate = 6% p.a.
Tenure = 3 years
Compounding = Quarterly (n = 4)A = 1,00,000 × (1 + 0.06/4)12 = ₹1,19,672
Interest Earned = ₹19,672
Case 3: Longer Tenure FD
Principal = ₹5,00,000
Rate = 7% p.a.
Tenure = 5 years
Compounding = QuarterlyMaturity Value ≈ ₹7,05,000
Interest Earned ≈ ₹2,05,000
FD Maturity Comparison Table
Here is an estimate of how a fixed deposit grows at 7% annual interest with quarterly compounding:
| Principal | 1 Year | 3 Years | 5 Years | 10 Years |
|---|---|---|---|---|
| ₹1,00,000 | ₹1,07,000 | ₹1,23,000 | ₹1,41,000 | ₹1,97,000 |
| ₹5,00,000 | ₹5,35,000 | ₹6,15,000 | ₹7,05,000 | ₹9,85,000 |
| ₹10,00,000 | ₹10,70,000 | ₹12,30,000 | ₹14,10,000 | ₹19,70,000 |
Note: Actual FD maturity varies slightly by bank, compounding frequency, and changes in interest rates.
Tax Rules on FD
- FD interest is fully taxable as per income tax slab.
- TDS is deducted if yearly FD interest exceeds ₹40,000 (₹50,000 for senior citizens).
- Tax-saving FDs (5-year lock-in) qualify for deduction under Section 80C (up to ₹1.5 lakh).
Why Use an FD Calculator?
Calculating FD maturity manually can be time-consuming, especially for compound interest. A Fixed Deposit Calculator Tool helps by:
- Showing exact maturity amount instantly
- Considering compounding frequency (quarterly, yearly, monthly)
- Helping compare FD schemes across banks
Try our Free FD Calculator Tool to calculate FD maturity instantly.
Key Points to Remember
- FDs are safe investments with guaranteed returns.
- Choose reinvestment option (compound interest) for higher maturity.
- Senior citizens get higher FD interest rates (0.25%–0.50% extra).
- Tax-saving FDs have a lock-in of 5 years and qualify under Section 80C.
FAQs on FD Calculation
1. How does a Fixed Deposit actually grow?
Your FD grows based on:
- The amount you deposit
- The interest rate offered by the bank
- How long you keep the money invested
That’s it. More time usually means more growth.
2. Is FD interest calculated monthly or yearly?
- Most banks calculate FD interest quarterly.
- Even if you receive interest monthly or yearly, the calculation usually happens every three months.
3. What’s the difference between cumulative and non-cumulative FD?
- Cumulative FD: Interest keeps getting added to your FD, and you get everything at maturity.
- Non-cumulative FD: Interest is paid out regularly — monthly, quarterly, or yearly.
4. How do banks decide the maturity amount?
Banks use compound interest, which means:
- You earn interest on your original amount
- Plus interest on the interest already earned
That’s why FDs grow better when you don’t withdraw early.
5. Is FD interest simple or compound?
Most FDs work on compound interest, not simple interest.
6. Will my FD interest rate change later?
No. Once you book an FD:
- The interest rate stays fixed
- Market rate changes won’t affect your FD
7. What happens to interest if I break my FD early?
If you withdraw before maturity:
- Interest is recalculated for the actual period
- A small penalty may be charged
- So the final amount becomes slightly less.
8. Do senior citizens get better FD returns?
Yes. Senior citizens usually get:
- A slightly higher interest rate
- Better maturity value compared to regular FDs
9. Does tax reduce my FD returns?
- Yes. FD interest is taxable.
- TDS may be deducted if interest crosses the limit
- Your final payout may be lower due to tax
10. Can I calculate FD returns on my own?
Yes, very easily.
- Use the bank’s FD calculator
- Or any online FD calculator
- Just enter the amount, rate, and time period.
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