FD Maturity Calculator
Calculate your fixed deposit returns and interest earned
Understanding Fixed Deposit (FD) Rates
A Fixed Deposit (FD) is a financial instrument provided by banks or Non-Banking Financial Companies (NBFCs) which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It is considered one of the safest investment avenues for conservative investors.
How is FD Interest Calculated?
Most banks calculate FD interest based on compound interest logic. The frequency of compounding—whether it is monthly, quarterly, or annually—significantly impacts the final maturity value. The formula used is:
A = P (1 + r/n)^(n*t)
- A: Maturity Amount
- P: Principal Deposit Amount
- r: Annual Interest Rate (decimal)
- n: Number of times interest compounds per year
- t: Number of years the money is invested for
Example Calculation
If you deposit 100,000 at an annual interest rate of 7% for a period of 5 years, with quarterly compounding (n=4):
By applying the formula, your total interest earned would be approximately 41,478, leading to a maturity value of 141,478. Without compounding (simple interest), the return would have been only 35,000.
Factors Affecting FD Rates
- Investment Tenure: Longer durations usually attract higher interest rates, though "sweet spot" tenures often exist.
- Age of Depositor: Senior citizens (usually above 60 years) often receive a premium of 0.25% to 0.50% over standard rates.
- Economic Conditions: Central bank policies and inflation rates directly influence the FD rates offered by commercial banks.
- Compounding Frequency: The more frequent the compounding (e.g., monthly vs. annually), the higher the effective yield on your deposit.