FD Calculator

What Is a Fixed Deposit?

A fixed deposit (FD), also called a term deposit, is money you place with a bank or NBFC for a fixed tenure at an interest rate locked in on the day you open it. Tenures typically run from 7 days to 10 years. Unlike a savings account, the rate does not change during the term, which makes the maturity amount known in advance. Withdrawing early is usually allowed but costs a penalty, commonly a reduction in the rate.

Deposits at banks in India are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India, up to ₹5 lakh per depositor per bank, covering principal and interest together.

How to Use the FD Calculator

Enter the deposit amount, the annual interest rate from your bank's rate card and the tenure in years, months and days. Pick how interest is compounded: quarterly is the default because it is what most Indian banks, including SBI and HDFC Bank, use for cumulative deposits. Choose simple interest for a payout FD that sends interest to your account every month or quarter instead of reinvesting it.

The same arithmetic works for term deposits elsewhere. A Canadian GIC, for example, usually compounds annually, so choose Yearly to use this as a GIC calculator.

FD Interest Formula

For a cumulative deposit, interest is added to the balance at the end of each quarter and earns interest itself from then on. With the defaults, ₹1,00,000 at 7% for 5 years compounded quarterly: r ÷ n = 0.07 ÷ 4 = 0.0175 and n × t = 20 quarters. A = 1,00,000 × 1.0175²⁰ ≈ ₹1,41,478, so the FD interest is about ₹41,478.

Quarterly compounding lifts the effective annual yield from 7% to about 7.19%. Monthly compounding would give ₹1,41,763; a payout FD at the same rate pays ₹35,000 in total interest because nothing is reinvested.

A = P × (1 + r ÷ n)^(n × t)

A

maturity amount

P

deposit amount

r

annual interest rate as a decimal

n

compounding periods per year: 4 for quarterly

t

tenure in years

When the tenure does not end on a compounding date, interest for the remaining days is added at simple interest on the compounded balance. For payout deposits, interest = P × r × t.

Cumulative vs. Payout FDs

A cumulative FD reinvests interest and pays everything at maturity, so it earns the most and suits money you will not need until then. A non-cumulative or payout FD sends interest to your savings account monthly, quarterly, half-yearly or yearly. It earns less in total but provides a regular income, which is why retirees often prefer it.

Banks commonly pay higher rates to senior citizens, often around half a percentage point more, and offer tax-saver FDs with a five-year lock-in that qualify for a deduction under Section 80C under the old tax regime.

Tax and Practical Tips

FD interest is taxable as income from other sources at your slab rate, whether it is paid out or reinvested. Banks deduct tax at source (TDS) on interest above a yearly threshold; if your total income is below the taxable limit, you can submit Form 15G (or Form 15H for senior citizens) to avoid the deduction.

• Compare rates across banks and small finance banks, but keep each bank's total within the DICGC limit.
• Ladder your deposits: split the amount into FDs of different tenures so some money matures every year.
• Check the premature withdrawal penalty before locking money away for a long tenure.
• Look at the post-tax return. At a 30% slab, a 7% FD earns about 4.9% after tax.

Frequently asked questions

Sources

• Reserve Bank of India
• DICGC – Deposit Insurance and Credit Guarantee Corporation
• Income Tax Department, Government of India