How to use the FD calculator
- Enter the amount you want to deposit.
- Enter the bank's interest rate for your tenure. Senior citizens usually get an extra 0.25–0.75%.
- Set the tenure in years and months.
- Keep Quarterly compounding for a normal cumulative FD – that's what most Indian banks use. Choose Simple interest if you take interest out every month or quarter (a payout FD).
The FD formula
For a cumulative FD with quarterly compounding, the maturity amount is:
A = P × (1 + r ÷ 4)4 × t
where P is the deposit, r the yearly rate as a decimal and t the tenure in years. Example: ₹1,00,000 at 7% for 5 years grows to about ₹1,41,478, so you earn ₹41,478 in interest. For a deeper explanation, read how FD interest is calculated.
Why compounding frequency matters
With quarterly compounding, the interest added every three months starts earning interest too. That's why a 7% FD actually yields about 7.19% a year – the "effective yield" shown above. For the same ₹1 lakh over 5 years, yearly compounding would give ₹1,40,255, about ₹1,200 less than quarterly.
Things to know before you invest
- Tax: FD interest is added to your income and taxed at your slab rate. Banks may deduct TDS once your interest crosses the yearly limit.
- Premature withdrawal: breaking an FD early usually means a lower rate and a small penalty.
- Deposit insurance: in India, DICGC insures bank deposits up to ₹5 lakh per depositor per bank, including interest.
- Laddering: splitting money into several FDs with different maturities keeps some money available every year.
Frequently asked questions
How is FD interest calculated in India?
Most banks compound FD interest every quarter for tenures of six months or more. For shorter FDs and payout options, simple interest is usually used.
What is the maturity value of ₹1 lakh at 7% for 5 years?
With quarterly compounding, it is about ₹1,41,478, which means around ₹41,478 in interest.
What is effective yield on an FD?
It is the yearly return after including compounding. A 7% FD compounded quarterly has an effective yield of about 7.19%.
Is FD interest taxable?
Yes. FD interest is taxable as income at your slab rate, and banks may deduct TDS above a yearly threshold.