How do I calculate my Fixed Deposit?
Determining the returns on your FD is fairly easy these days, with most banks offering you online calculator tools on their website
Updated On - 17 March 2023, 12:05 PM
Hyderabad: Safe-bet Shankar has some extra cash this month and wants to invest it so that the money will grow to meet his future financial needs. He wants to open an FD and wants to know exactly how much he will get at maturity if he puts down a certain amount now. He’s not clear on how to go about this and would love some help.
Determining the returns on your FD is fairly easy these days, with most banks offering you online
calculator tools on their website. If you, too, are like Shankar, read ahead to learn know how to do the
calculations for your fixed deposit.
How to Calculate Your FD?
To find out the FD value at maturity, you will need the following information:
● Interest Rate
Fixed deposit interest rates vary depending on the tenure. In fact, banks offer higher interest rates
for senior citizens. Find out your FD interest rate by talking to the bank or checking their website. In
most online fixed deposit calculators, this data will be auto-populated.
● Interest Pay out
Banks will pay out the interest on a monthly, quarterly, half-yearly, or annual basis. This is a case of
simple interest. Or your interest could be reinvested and paid out only at maturity. This would be
compound interest.
● Tenure
This is the time for which you are going to invest your fixed deposit. FD interest rates are usually
higher for longer tenures.
● Principal Amount
This is the amount that you will put down in your FD. Most banks have a minimum and maximum
limit for this amount.
Calculating Your FD
Once you determine all the components of your fixed deposit, you can easily calculate your potential
returns by following these steps-
● Visit the official website of your desired lender
● Open the Fixed Deposit page and navigate to the online FD calculator
● Enter the amount you wish to invest, the interest rate, and the duration of your investment
● Select if you want to reinvest your interest or opt for regular payouts
● Click on ‘Calculate’
The online fixed deposit calculator will instantly calculate your potential returns at the end of your
investment.
Why Calculate?
Calculating the amount you will receive on maturity is important for solid financial planning. Here’s why
it’s good to do it via an online calculator-
● Avoiding Human Error
Human calculations are error-prone. So, working out multiple iterations of the formulae for different
combinations of principal, tenure, and FD interest rates may prove cumbersome. With an online FD
calculator, you can do this instantly.
● Deciding on Your Tenure
If you do not have any planned expenses, you can choose a tenure that maximizes the total interest
earned for your principal. By adjusting the online FD calculator for different tenures, you can see
which earns the highest FD interest rate and choose accordingly.
● Planning to Meet Future Expenses
If there is a known future expense coming up, for example, payment of college fees for kids, you can
use the calculator to determine how much money you must invest in the FD to meet the expense
when it comes. Then, you can plan your principal amount and tenure to receive the required
amount at the same time as the expected expense.
Final Word
With guaranteed investments like FDs, it is always better to know beforehand how much of a return you
can expect. Most banks offer an online calculator for this very purpose. Once you’ve decided on a
banking partner, don’t hesitate to explore theirs!