FD Calculator

A fixed deposit is among the simplest investments there is: you hand over a sum for a set period at a rate known in advance, and you receive the sum and the interest at the end. The only complications are how often interest is added to the balance and how much of it you keep after tax. This calculator handles both and shows the value at each year, so you can compare deposit offers on equal terms.

The maturity formula

If interest is compounded n times a year at an annual rate r, a deposit P held for t years grows to P × (1 + r ÷ n)^(n × t). Quarterly compounding means n = 4, which is the usual convention at Indian banks, so the factor for each quarter is 1 + r ÷ 4. If you choose simple interest, the formula is P × (1 + r × t) and the interest is paid at the end without compounding. Tenures given in years and months are combined, so 1 year and 6 months is 1.5 years.

A worked example

The default deposit is 5,00,000 at 7% for 5 years, compounded quarterly. At maturity it is worth 7,07,389.10, of which 2,07,389.10 is interest, an average of 41,477.82 a year. The effective annual yield is 7.19%. The table shows the value after year one as 5,35,929.52, year two 5,74,440.89 and year three 6,15,719.66. In the second sample, 10,00,000 at 6.8% for one year with monthly compounding, the maturity value is 10,70,159.88, the effective yield 7.02%, and a taxpayer in the 30% slab keeps 49,111.92 of the 70,159.88 interest, ending with 10,49,111.92.

Compounding intervals

More frequent compounding gives a slightly higher return at the same stated rate. On a rate of 7%, yearly compounding gives an effective 7.00%, half-yearly 7.12%, quarterly 7.19% and monthly 7.23%. The gaps are small for a single year but accumulate over long tenures. When comparing two offers, compare their effective yields, not the headline rates, unless both use the same interval.

Tax on the interest

Interest on a deposit is added to your income and taxed at your slab rate, and banks deduct tax at source when the interest goes beyond a limit in a year. The tax field applies one rate to the whole interest, which is a fair estimate when your slab does not change, and is shown separately so you can see what is left. In reality tax falls due each year on the interest accrued in that year, even on a cumulative deposit that pays out at maturity.

Edge cases

A tenure of zero is rejected, and so is a negative rate. A rate of zero returns the deposit unchanged. A tenure given only in months works if you put it in the months box, up to 600. When the tenure is fractional, the last row of the table shows the end of the term rather than a whole year, so the final value always matches the headline figure.

Limits

Banks may round interest at each credit, count days rather than months or pay a different rate on early withdrawal, so the figure on your deposit receipt is the one that binds. Senior-citizen rates, premature closure penalties and the exact tax treatment are not modelled, and the stated rate is entered by you.

Related tools

• RD Calculator values a deposit made in monthly instalments instead of one sum.
• Compound Interest Calculator projects any compounding interval and regular additions.
• SWP vs FD Calculator shows what a fixed deposit pays out as monthly income after tax.
• PPF Calculator compares a tax-free government account with a taxable deposit.