Fixed Deposits as we all know are safe and secure investments. Since they provide a calculated return, they are a very popular form of investment. What makes FDs so lucrative is that their interest rates are fixed for the entire duration of the lock-in period and are not swayed by any type of market forces.

But FDs have certain issues as well. The interest that you earn is taxable if your earnings are more than Rs.10,000 in a given fiscal year. Besides that, it may be a tricky question as to how long the duration of your FD should be, keeping inflation factor in mind. For all that, you need to calculate your FD earnings beforehand so that you gain good returns. Here, we are going to learn just that – how to calculate Fixed Deposit Interest.


In India, interest on FDs is generally compounded on a quarterly basis in rupees, though you may calculate on the basis of monthly, half-yearly or annual basis too. Let us check out the formula which is used to calculate the maturity amount of FDs:

A= P (1 + r/n)nt

Here A is the amount which you get after maturity

P is the Principal you invested

r is the rate of interest your bank is providing you

(it cannot be in percentage

E.g. 7.5% per annum means r = 0.075)

n is the number of times interest is compounded

t is the number of years

If you want to calculate just the interest, then you may do so in a simple step as stated below:

I = A – P

Where I is the interest amount

Interest on FDs can be calculated in two ways- Simple Interest, SI and Compound Interest, CI.

When it is done in SI, then the interest is calculated on the deposit as principal for the entire duration of the FD. The interest earned is constant. The returns in this case are relatively lower.

FD in SI (an example):

Deposit = Rs. 25000

Time period = 5 years

Interest Rate= 7.85%

Interest Earned = Rs. 9812

Amount at Maturity = Rs. 34812/-

When it is done using CI, principal of the previous period is added to the interest for the same period. After adding the two, we get the principal for the new cycle and this is repeated for the whole time period. The principal is not constant here and keeps on increasing. That is why the returns are higher with Compound Interest.

FD in CI (an example):

Deposit = Rs. 25000

Time period = 5 years

Interest Rate= 7.85%

Interest Earned = Rs. 11,479/-

Matured Amount = Rs. 36,479/-

Doing the calculations manually is very difficult. There is a better and faster way to calculate the interest earned on an FD and the maturity amount. This involves using an online calculator which is available on the website of various banks and NBFCs.

How to Use these Online Calculators:

FD online calculators use the same formula but are specifically designed by the individual banks or NBFCs as per their requirements. They are fairly accurate and are known to provide correct results.

You can calculate your FD Returns in Three Easy Steps:

  • Feed the Principal
  • Feed the tenor
  • Feed the interest rate (on some websites, the calculator automatically fixes the interest rate for the case under consideration)

You can watch this video to understand how to use an online FD calculator:

FDs are a great way to invest your savings but they do not provide the highest returns on investment. If you are choosing the right tenure and the right amount along with the highest interest rate possible for your case, then it might get you significant returns.


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