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Calculate Online Fixed Deposit Interest Rates
02 Aug 2023

## What is an FD?

A healthy financial portfolio is a balanced one. While you should invest in equity instruments to generate long term corpus, it is equally important to have fixed income or debt-based investment products as well. A fixed deposit (FD) serves this purpose. In this instrument, you invest a lump sum amount over a fixed time period and at a fixed yearly interest rate. At the end of the tenure, you get back your principal amount and the interest accrued. You also have the option of getting the interest credited to your account on a monthly/quarterly/annually frequency and use it for managing your regular household expenses. The best part about a fixed deposit is that while the returns might not be as high as stocks or mutual funds, they are pretty much guaranteed and largely unaffected by market volatility.

Almost all banks and most non-banking financial institutions (NBFCs) offer different types and durations of fixed deposits. With so many to choose from, how do you identify which one to invest in? While the investment tenure is your choice, different institutions offer different interest rates. Considering that most aspects of an FD are similar, it is the interest rate that becomes the primary deciding factor. However, in order to compare among different FDs, the interest calculation can be a cumbersome task. Fortunately, this can, easily, be done using an online FD interest calculator. Let us know more about it.

### How to use an FD interest calculator?

An FD interest rate calculator is a very convenient tool that automatically calculates the amount you can expect in return, at the end of the investment period. All you need to do are enter the following parameters:

• Total investment amount
• FD rate of interest
• Investment tenure

That’s all it takes. The in-built function of the FD interest calculator will automatically let you know the return on your investment.

### How does an FD interest calculator work?

If you’re keen to understand the underlying calculation logic then you must note there are two types of interests that FDs can offer. Here is the calculation formula for each of them.

### Simple Interest: A = P (1 + rt)

Where;

• A = total amount you will receive (principal + interest)
• P = the principal you have invested
• r = the rate of interest
• t = the investment period

So, for example:

if you have invested ₹ 1L for a period of 1 year at an interest rate of 6% per annum, using the formula above, your total amount will be ₹ 1,06,000. Your interest amount will be = (A - P) which translates to 1,06,000 - 1,0,000 = ₹ 6,000.

### Compound Interest: A = P (1+r/n)nt

Where;

• A = total amount you will receive (principal + interest)
• P = the principal you have invested
• r = the rate of interest
• t = the investment period
• n = frequency of compounded interest (like monthly, quarterly, annually, etc.)

So, for example:

if you have invested ₹ 1L for a period of 1 year at an interest rate of 6% per annum with a compounding frequency of twice each year, then your total amount will be ₹ 1,06,090 and your interest earned will be ₹ 6,090. Check out the Compound interest Calculator and get deeper insights.

### In Summation

The online FD interest calculator helps you evaluate your overall returns using different factors as inputs. Using it, you can easily compare the different FD rates to choose the ideal one for your needs. You can also use it for personal financial planning for your future.