FD Calculator

How FD interest is calculated

Most Indian banks compound fixed deposit interest quarterly for cumulative deposits, meaning interest is added to the principal every three months and then earns interest itself. The formula is A = P × (1 + r/n)^{n × t}, where n is the number of compounding periods per year. ₹1 lakh at 7% for one year compounded quarterly becomes about ₹1,07,186, slightly more than simple interest of ₹7,000.

Cumulative vs interest payout

• Cumulative FD: interest compounds and is paid at maturity. This calculator shows this.
• Non-cumulative FD: interest is paid out monthly or quarterly, so it doesn’t compound; you receive simple interest over time.

Tax on FD interest

FD interest is added to your income and taxed at your slab rate. Banks deduct TDS when interest crosses the yearly threshold, which is higher for senior citizens. If your total income is below the taxable limit, you can submit Form 15G (or 15H for seniors) to avoid TDS. Tax-saving FDs with a 5-year lock-in qualify for 80C in the old regime.

Getting the most from FDs

• Senior citizens usually get about 0.25–0.5% extra.
• Small finance banks often offer higher rates; deposits up to ₹5 lakh per bank are insured by DICGC.
• Laddering, splitting money into FDs of different tenures, keeps some money accessible and reduces reinvestment risk.

Compare other options

For monthly deposits, use the RD calculator. For tax-free long-term savings, see PPF. Rates change often; check your bank’s current rate before investing.

Quick answers

What happens if I break an FD early? Banks usually pay a lower rate for the period held, minus a penalty of around 0.5–1%. Can I get a loan against my FD? Yes, typically up to 90% of the deposit at a rate slightly above the FD rate, which can be cheaper than breaking it. Should seniors choose monthly payout? If they need regular income, yes, though cumulative FDs earn slightly more.