Steps to calculate returns with an FD interest calculator

A Fixed Deposit (FD) allows you to invest a certain amount for a specific period and earn returns on it at a predetermined rate of interest. The tenure can range from 7 days to 10 years. The longer the tenure of your FD, the higher can be the applicable rate of interest and the interest amount that you will earn on maturity. 

If you wish to know your FD maturity amount, you can use an FD interest calculator. It is a simple-to-use online tool available for free on the websites of all major banks and non-banking financial corporations (NBFCs).

How to use an FD interest calculator?

Step 1 - Go to the bank’s website and search for the FD interest calculator. For instance, you can use IDFC FIRST Bank’s FD calculator.

Step 2 - Specify whether you are a regular customer or a senior citizen. Banks usually offer higher FD interest rates to senior citizens.

Step 3 - Select the type of FD you want to invest in. With IDFC FIRST Bank, you can choose between reinvestment, short-term, quarterly payout, and monthly payout FDs.

Step 4 - Enter the amount you want to invest in an FD. You can use the slider or input the investment value directly into the designated space.

Step 5 - Enter your FD tenure as the years and days. For example, if you want your FD tenure to be 30 months, you must enter ‘2’ in the ‘years’ column and ‘180’ in the ‘days’ column of your FD interest calculator.

Once you enter these values in an FD interest calculator, it will immediately display your maturity date, estimated FD maturity amount, and interest income.

The formula for FD maturity calculation

The formula used by an FD interest calculator depends on the type of FD you choose. To calculate the maturity amount for a simple interest FD, use the following formula - 

M = P + ((P * R * T) / 100),

Where ‘M’ is the maturity amount, P is the amount invested, ‘R’ is the applicable interest rate, and ‘T’ is the FD tenure in years.

For example, if you invest Rs 1 lakh in a six-month FD earning 7% interest per annum, your maturity amount would be Rs 1,00,000 + ((1,00,000 * 7 * 0.5) / 100) = Rs 1,03,500.

For a compound interest FD, an FD interest calculator uses the following formula - 

M = P (1 + R/100*N) ^ N * T,

Where ‘M’ is the maturity amount, ‘P’ is the amount invested, ‘R’ is the applicable interest rate, ‘T’ is the tenure in years, and ‘N’ is the number of compounding instances in a year.

For example, if you invest Rs. 1 lakh for two years in an FD offering 7% per annum interest compounded quarterly, your maturity amount would be Rs 1,00,000 * (1 + 7 /100* 4) ^ 4 * 2 = Rs 1,14,888.

Conclusion

An FD interest calculator is a simple-to-use online tool. You need to enter your investment amount, FD type, , and tenure, and it will instantly calculate your approximate maturity amount and interest income basis the rate of interest pre-defined by the bank.

With IDFC FIRST Bank, you can open an FD account from the comfort of your home and earn a competitive interest rate that is one of the best in the industry. Click here to learn more.

We do not recommend FD rates to be mentioned in the blogs as they are subject to frequent changes. Tracking and updating the rates in blogs would be challenging 

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.