FD Calculator

How FD Interest is Calculated

A Fixed Deposit (FD) is a savings instrument offered by banks where you deposit a lump sum for a fixed tenure at a predetermined interest rate. Interest is compounded at regular intervals.

FD Formula

A = P × (1 + r/n)^n×t

Where:
P = Principal (deposit amount)
r = Annual interest rate (in decimal)
n = Compounding frequency per year
t = Time period in years

Tips for Better FD Returns

Compare rates across banks — small NBFCs often offer 0.5-1% higher rates.

Senior citizens (60+) get 0.25-0.50% extra on FD rates.

Consider laddering FDs across different tenures for better liquidity.

Tax-saver FDs have a 5-year lock-in but qualify for 80C deduction up to ₹1.5 lakh.

Frequently Asked Questions

How is FD interest calculated?

FD interest is calculated using compound interest formula: A = P(1 + r/n)^(nt). Most banks compound quarterly. The interest earned depends on principal, rate, tenure, and compounding frequency.

Which compounding gives best returns?

Monthly compounding gives the highest returns, followed by quarterly, half-yearly, and yearly. However, the difference is marginal — for ₹5 lakh at 7% for 5 years, monthly vs yearly compounding differs by only about ₹5,000.

Is FD interest taxable?

Yes, FD interest is fully taxable as per your income tax slab. Banks deduct TDS at 10% if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS if not taxable.

Can I break my FD before maturity?

Yes, but premature withdrawal usually attracts a penalty of 0.5-1% reduction in the applicable interest rate. Some banks also have minimum lock-in periods.

Answers, not just a number

Questions this calculator answers, worked out in full — the number first, then the table and the formula behind it.

How much interest will I get on a Rs 10 lakh fixed deposit?About Rs 70,000 a year at 7%, before tax.

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