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What Is Fixed Deposit Interest Rate? How Can You Calculate It?
Posted on Tuesday, March 7th, 2023 | By IndusInd Bank
An FD Calculator is a simple and free tool that generates accurate results involving multiple variables within seconds. It basically helps you determine your FD interest and subsequent total amount for the desired tenure at the time of maturity.
When it comes to investing money, security of funds and ease of operation are two key criteria. A fixed deposit FD scheme meets both, making it appealing to a large section of the general Indian public.
In simple terms, an FD is an amount that you deposit in your bank for a fixed tenure at a pre-decided rate of interest. When the tenure ends, you receive the amount you have invested in addition to the interest accrued. The fixed deposit interest rate is an important component since the money in an FD grows by virtue of the interest that accumulates.
Calculating your Fixed Deposit Interest Rate
Manually calculating the interest on your FD can be a tedious and time-consuming affair. A Fixed Deposit Calculator is a useful online tool you may use to calculate your FD interest. An FD Calculator helps you in several ways. One, it helps you determine the interest and total amount you will receive on your FD for the chosen tenure at the time of maturity. Two, it helps you compare various FD schemes with differing interest rates and tenures and figure out the best returns. An automatic calculator, it can rapidly and accurately perform complex calculations involving multiple variables at the click of a mouse.
How is FD Interest Calculated?
The interest rate on your FD is primarily computed on the basis of the tenure and prevailing rate of interest. The interest rate and subsequent interest amount varies on the basis of the length of the tenure. There are two methods which can be used to compute interest on a fixed deposit – a) Simple Interest (SI) and b) Compound Interest (CI).
a) Simple interest refers to the interest earned on an investment at a pre-determined rate of interest for a specific time period. The formula for calculating this is as follows:
Simple Interest = P x R x T/ 100
Wherein,
P = Principal (amount invested in the FD)
R = Rate of Interest (in percentage)
T = Tenure (time period in years)
For instance, if INR 10,000 is invested for 3 years at 10% per annum, simple interest would be:
10,000*10*3/100 = INR 3,000
The maturity amount would therefore be INR 13,000
b) Compound interest denotes the interest earned on the principal as well as interest amount. It is calculated as follows:
P (1+r/n) ^ (n * t)
Wherein,
P = Principal sum
r = Rate of Interest
n = number of times compounding in a year
t = tenure in years
For example, if INR 10,000 is kept in the FD for a span of 3 years at a quarterly compounding fixed deposit interest rate of 10%, the interest at maturity would be computed as follows:
10,000 {1 + (0.1/4)} ^ (4 * 3)
10,000 (1 + 0.025) ^ (12)
10,000 (1.025) ^ (12) = INR 13,449 (approximately)
The maturity amount would approximately be INR 13,449
How to Use the IndusInd Bank FD Calculator
Using the IndusInd Bank FD calculator is extremely simple. All you need to do is enter your investment amount and the desired tenure of your FD in years and months. The calculator will generate the results before you in a moment, displaying the applicable interest rate, interest amount, maturity date, and maturity amount.
Thus, by making you aware of how much interest your Fixed Deposit would yield at the time of maturity, a fixed deposit calculator can be tremendously useful to potential investors. Use it before investing your money in an FD for prudent and better-informed financial decisions.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
