How to make use of a FD Calculator

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Fixed deposits are one of the popular means of investment for most of the people as the returns on the FD are not subject to market risks and despite that provide a good return on your investment. The company fixed deposits even offer higher returns with your investment. However, what astonishes is the calculation of interest and the total amount that the investor will get at the end of the maturity period. 

Are you too anxious about how much returns you will get on your investments? If you have chosen non-cumulative fixed deposits, the anxiety to know about the profits would be much higher. However, there is a simple solution to your problems, and that is the Fixed deposit calculator. Before knowing what an FD calculator is, and how it works. Let’s understand a bit about how the interest on fixed deposits is calculated.

The interest rate on fixed deposits: The banks determine the interest rate on bank fixed deposits as per the RBI’s policy. Presently, the interest on FD ranges from 4% to 9% and varies from bank to bank.

The table below depicts the interest rate of FD of a few banks:

Banks FD Rates
Bajaj Finance 7.40% – 7.85%
HDFC 7.30% – 7.55%
PNB Housing Finance 7.20% – 8.00%
IDFC First Bank 4.00% – 7.75%
Axis Bank 3.50% – 6.75%

How is interest calculated: The formula for calculating fixed deposit interest rates is shown below

A = P * (1+ r/n) ^ n*t

I = A – P

A = Maturity value

P = Principal amount

r = rate of interest

t = Number of years

n = Compounded interest frequency

I = Interest earned amount

Mathematically understanding, the interest is calculated either using the simple interest method or compounded interest method.

Interest calculation using simple interest formula: If you have invested Rs 1 lakh in your FD account at 10% rate of interest for 5 years, the interest on your fixed deposit would be as follow:

Interest for the 1st year= 1,00000*10%=10,000

Interest for the 2nd year= 1,00000*10%=10,000

Interest for the 3rd year= 1,00000*10%=10,000

Interest for the 4th year= 1,00000*10%=10,000

Interest for the 5th year= 1,00000*10%=10,000

Total returns= 1 Lakh+50,000=1,50,000

Interest calculation using simple interest formula: However, the calculation of interest using a compounded formula is done by calculating the interest on the new principal amount. If at the end of 1sy year, the interest earned is 10,000, the interest for the 2nd year will be calculated on Rs.1,10,000.

What is FD calculator: If you don’t like maths, well the FD calculator can help you to know about the returns very quickly. It is an online tool which allows you to know about the returns on your investments. To calculate the returns, all of you have to do is provide the total amount of investment, rate of interest and the tenure of the investment and it will give you interest earned and the amount you will receive at the end of maturity period

Thus, with the help of an FD calculator, you can save a lot of time and sweat in calculating the FD returns.

Summary:How to make use of a FD Calculator

Fixed deposits are one of the popular means of investment for most of the people as the returns on the FD are not subject to market risks and despite that provide a good return on your investment.

Are you too anxious about how much returns you will get on your investments? If you have chosen non-cumulative fixed deposits, the anxiety to know about the profits would be much higher. However, there is a simple solution to your problems, and that is the Fixed deposit calculator or FD calculator.

What is FD calculator: If you don’t like maths, well the FD calculator can help you to know about the returns very quickly. It is an online tool which allows you to know about the returns on your investments. To calculate the returns, all of you have to do is provide the total amount of investment, rate of interest and the tenure of the investment and it will give you interest earned and the amount you will receive at the end of maturity period.Thus, with the help of an FD calculator, you can save a lot of time and sweat in calculating the FD returns.

 

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