A Fixed Deposit (FD) is a popular financial instrument offered by banks and financial institutions that provides a fixed rate of return for a specified period. It's a safe investment option, ideal for individuals looking to grow their savings steadily without taking significant risks. The interest earned on an FD is calculated based on the principal amount, the annual interest rate, the duration of the deposit, and the frequency at which the interest is compounded.
The Compound Interest Formula for FDs
The most common method for calculating FD interest is through compound interest, where the interest earned in each period is added to the principal, and the subsequent interest is calculated on this new, larger principal. The formula used is:
A = P (1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit)
r = the annual interest rate (as a decimal, e.g., 6.5% becomes 0.065)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
To find only the interest earned, you would subtract the principal amount from the future value:
Interest Earned = A – P
How Our Calculator Works
Our Fixed Deposit Interest Calculator simplifies this process. You need to provide:
Principal Amount: The initial sum of money you deposit.
Annual Interest Rate: The rate of interest offered by the bank on your deposit, expressed as a percentage per annum.
Time Period: The duration for which you intend to keep the money in the FD, measured in years.
Compounding Frequency: How often the earned interest is added back to the principal. Common frequencies include Annually (n=1), Semi-Annually (n=2), Quarterly (n=4), Monthly (n=12), and Daily (n=365).
The calculator then applies the compound interest formula to determine the total amount you will have at the end of the term and the total interest you will have earned.
Why Use a Fixed Deposit Calculator?
Planning: Helps you estimate your future savings and understand the growth potential of your investment.
Comparison: Allows you to compare different FD schemes from various banks by inputting their respective rates and tenures.
Goal Setting: Aids in setting financial goals by showing how much you can earn by investing a certain amount for a specific period.
Informed Decisions: Provides clarity on how interest rates and compounding frequencies impact your overall returns.
By using this calculator, you can make more informed decisions about your savings and investments, ensuring your money works harder for you.
function calculateInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualRate = parseFloat(document.getElementById("annualRate").value);
var timePeriod = parseFloat(document.getElementById("timePeriod").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(principal) || principal <= 0) {
resultDiv.innerHTML = 'Please enter a valid principal amount.';
return;
}
if (isNaN(annualRate) || annualRate < 0) {
resultDiv.innerHTML = 'Please enter a valid annual interest rate.';
return;
}
if (isNaN(timePeriod) || timePeriod <= 0) {
resultDiv.innerHTML = 'Please enter a valid time period.';
return;
}
if (isNaN(compoundingFrequency) || compoundingFrequency <= 0) {
resultDiv.innerHTML = 'Please select a valid compounding frequency.';
return;
}
var ratePerPeriod = annualRate / 100 / compoundingFrequency;
var numberOfPeriods = compoundingFrequency * timePeriod;
// Using the compound interest formula: A = P (1 + r/n)^(nt)
var futureValue = principal * Math.pow((1 + ratePerPeriod), numberOfPeriods);
var interestEarned = futureValue – principal;
// Displaying the results
var formattedFutureValue = futureValue.toLocaleString('en-IN', { style: 'currency', currency: 'INR' });
var formattedInterestEarned = interestEarned.toLocaleString('en-IN', { style: 'currency', currency: 'INR' });
resultDiv.innerHTML = 'Total Amount: ' + formattedFutureValue + '' +
'Total Interest Earned: ' + formattedInterestEarned + '';
}