What is the monthly interest you can earn from your fixed deposit?

A monthly fixed deposit (FD) interest plan can be a great idea if you are looking for a fixed monthly income to cover your expenses. In this scheme, fixed deposit interest is computed for the quarter and credited monthly to your current or savings account based on predetermined FD rates.

When your FD matures, the principal constituent is transferred to your savings account. This plan is highly popular among retired individuals or those with huge surpluses.

A fixed deposit account offers flexibility to deposit funds based on your financial planning. You can open a fixed deposit account with a minimum deposit starting ₹5000 in a regular bank in India. However, online FDs require even lesser initial deposits. IDFC FIRST Bank regular FD can be opened at any branch with a minimum deposit of ₹10,000 whereas an online FD in the bank requires a minimum deposit ₹1,000.

Our fixed deposits offer flexible tenures ranging from 7 days to 10 years to suit your financial planning and meet your objectives. You get one of highest interest rates in the industry along with minimal banking charges. Premature withdrawal for senior citizens is free. 

How is the interest calculated on a fixed deposit?
 

Interest calculation in FD is based on two methods which are simple interest and compound interest calculation. Depending on the type of FD you hold, the calculation method changes. For a non-compounding fixed deposit(non-cumulative), you can use a simple interest (SI) calculation method and for a compounding(cumulative), use the compound interest (CI)calculation.

Here are the expressions for interest calculation:

For SI calculation

SI = (P x r x t/100)

Where ‘P’ is the principal amount, ‘r’ is the interest rate and ‘t’ is the tenure.

For CI calculation

CI= P {(1 + r/100) t – 1}

Where ‘P’ is principal amount, ‘r’ is the interest rate and ‘t’ is the tenure.

Manual calculation can consume time and effort, so it is advisable to use the online FD calculator tool offered by IDFC FIRST Bank for precise and error-free calculation. Following are rough projected monthly interest on various deposited amounts. 

· ₹1 lakh FD interest per month

The monthly fixed deposit of ₹1 lakh usually earns an interest rate ranging between 2.50 % and 6.50 %and it can roughly pay you a monthly interest of ₹200 at 2.5% rate and ₹520 at 6.50% rate. This monthly interest constituent is computed using an online FD calculator. You can also adjust the principal amount to know the earnings based on your investments.

· ₹5 lakh FD interest per month 

Similarly, for a deposit 5 lakhs in the FD, you can earn a monthly interest of around ₹1000 at 2.5% rate and ₹2600 at 6.5% interest rate.

  Documents required to invest in this monthly income investment scheme
 

The documents needed to invest in fixed deposits (FDs) varies with every institution. IDFC FIRST Bank requires the following documents from fixed deposit investors:

· Passport-size photograph

· Aadhaar card

· Passport

· Voter’s identity card (Election Card)

· Permanent and valid driving license with photograph

· Job Card issued by NREGA duly signed by an officer of the State Government

· Letter issued by the National Population Register containing details of name and address

· PAN card/Form 60 for deposits >= ₹50,000

However, if you hold a savings or a current account with IDFC FIRST Bank account, you don’t need to undertake any documentation process.

A fixed deposit with a monthly interest payout is prudent for you if you have a low-risk appetite and are seeking a regular monthly income. The only difference between monthly interest FDs and other FDs is that with the former, you can keep receiving interest constituent on the FD corpus you have invested every month which endows you with liquidity, while the interest rate earned is a little higher with other cumulative FD options.

An online fixed deposit calculator can assist you to determine the interest you will earn on a monthly fixed deposit plan versus other fixed deposits. Doing so can help you make an informed decision.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank 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 mentioned. Please consult your financial advisor before making any financial decision.