How to work out FD interest
- Enter the Deposit, the bank’s Interest rate and the tenure in Years and Months.
- Choose Reinvest if the interest stays in the deposit until maturity, and how often it compounds (quarterly at most banks). Choose Pay out if the bank sends you the interest monthly or quarterly.
- Read the maturity amount and interest earned, or the interest paid to you each time. The yearly table shows how the balance grows.
How compounding frequency changes the result
₹1,00,000 for 5 years at 7%:
| Interest | Maturity amount | Interest earned |
|---|---|---|
| Simple (paid out, not reinvested) | ₹1,35,000 | ₹35,000 |
| Compounded yearly | ₹1,40,255 | ₹40,255 |
| Compounded half-yearly | ₹1,41,060 | ₹41,060 |
| Compounded quarterly | ₹1,41,478 | ₹41,478 |
| Compounded monthly | ₹1,41,763 | ₹41,763 |
The payout row assumes you spend the interest. If you reinvest payouts yourself, you end up close to the compounded figures.
Before you book an FD
Compare rates across banks and tenures: the best rate is often for a particular band of months rather than the longest term. Senior citizens usually get a higher rate. Breaking an FD early normally means a penalty or a lower rate, so if you may need some of the money, splitting it into a few smaller deposits with different maturities keeps the rest earning. To compare with market-linked investing, try the SIP calculator.