Fixed Deposit Calculator

A fixed deposit (FD) is a financial instrument provided by banks or other financial institutions that offers a higher rate of interest than a regular savings account until the given maturity date. It may or may not require the account holder to maintain a minimum balance.

How Fixed Deposit Works

A fixed deposit is a type of term investment that provides guaranteed returns over a fixed period. When you open an FD, you deposit a lump sum amount for a predetermined tenure at a fixed interest rate. The principal amount remains locked during the tenure, and you receive the principal along with the interest earned at maturity.

Fixed Deposit Formula

The formula to calculate the maturity amount of a fixed deposit depends on whether it's a simple interest or compound interest FD:

For Simple Interest: Maturity Amount = Principal + (Principal × Rate × Time) / 100

For Compound Interest: Maturity Amount = Principal × (1 + Rate/n)^(n×Time)

Where:

• Principal is the initial deposit amount
• Rate is the annual interest rate
• Time is the tenure in years
• n is the number of times interest is compounded per year

Benefits of Fixed Deposits

1. Guaranteed Returns: FDs offer assured returns, making them a safe investment option.
2. Flexible Tenure: You can choose the tenure as per your convenience, usually ranging from 7 days to 10 years.
3. Higher Interest Rate: FDs generally offer higher interest rates compared to savings accounts.
4. Loan Against FD: Most banks allow you to avail loans against your FD, usually up to 90% of the deposit amount.
5. Tax Benefits: Certain types of FDs like tax-saving FDs offer tax deductions under Section 80C of the Income Tax Act.

Fixed Deposit vs. Other Investment Options

Compared to other investment options like mutual funds or stocks, fixed deposits are considered low-risk investments. While the returns may not be as high as equity investments, they offer stability and guaranteed returns. Unlike savings accounts, FDs have a fixed tenure, and premature withdrawal may attract penalties.

Common FAQs

What is the minimum amount required to open an FD? The minimum amount varies from bank to bank, but it's usually around $100 or equivalent in local currency.

Can I withdraw my FD before maturity? Yes, most banks allow premature withdrawal, but it may attract a penalty, and the interest rate may be lower than the originally agreed rate.

Is the interest earned on FD taxable? Yes, the interest earned on fixed deposits is taxable as per your income tax slab. However, TDS (Tax Deducted at Source) is deducted only if the interest exceeds a certain threshold in a financial year.

Can I get a loan against my FD? Yes, most banks offer loans against fixed deposits, usually up to 90% of the deposit amount. The interest rate on such loans is generally lower than other personal loans.

What happens if I don't withdraw my FD after maturity? If you don't withdraw your FD after maturity, it gets automatically renewed for the same tenure at the prevailing interest rate, unless you specify otherwise.