FD interest calculator for bank fixed deposits

FD interest calculator method: how to calculate FD interest each quarter

In a cumulative deposit, interest is not paid out. Every three months the bank works out interest for the quarter and adds it to the deposit. The next quarter's interest is then worked out on that bigger amount. This is compound interest, and it is what an FD compound interest calculator models.

In words, the formula is: maturity equals deposit multiplied by (1 plus yearly rate divided by 400), raised to the power of (4 multiplied by the number of years). The 400 comes from dividing the rate by 100 to make it a fraction and by 4 because there are four quarters in a year.

Worked example table at an example rate

The rate here is only an example to show the maths. It is not any bank's offer.

Notice that 7 percent compounded each quarter gives about 7.19 percent in the first year. Banks often print this as the annualised yield next to the card rate.

FD calculator for monthly interest and quarterly payout

If you want income instead of growth, choose a payout deposit. Nothing is compounded; interest is sent to your savings account.

• Quarterly payout: deposit multiplied by rate, divided by 400. For 10 lakh at 7 percent that is 17,500 rupees every quarter.
• Monthly payout: a touch under the yearly interest split twelve ways, because the bank pays you before the quarter ends and so discounts it a little. For 10 lakh at 7 percent, the plain one twelfth is 5,833 rupees, while the discounted figure banks use is about 5,800 rupees.

The monthly FD interest calculator above uses this discounted method, so it should be close to what your bank pays.

Why your bank receipt may show a different number

• Days, not quarters: for odd periods such as 400 days, banks count interest for the leftover days separately.
• Short deposits: for terms under about six months, many banks pay simple interest at maturity with no compounding.
• Rounding: each quarter's interest may be rounded to the nearest rupee.
• TDS: tax deducted during the term reduces what you receive. See tax and TDS on FD interest.
• Early closure: breaking a deposit usually means a lower rate plus a penalty set by the bank.

What changes the result most

Three things move the answer: the rate, the period and the payout choice. Rates change with the bank, the tenure bucket and your age. A senior citizen usually gets a little extra, as explained on the senior citizen FD rates page. Longer periods give more compounding, but rates for 5 to 10 years are not always higher than for 1 to 3 years. To compare rate patterns across bank types, read how to find the highest FD rates.

Post office deposits and other calculators

A post office time deposit also compounds each quarter, but the interest is paid out once a year rather than added on. Its rates are fixed by the government, and at present the 5 year deposit earns 7.5%. That case has its own time deposit calculator for post office accounts. For a deposit you build up monthly, the RD calculator fits better.