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A fixed deposit interest calculator is a useful tool that helps you decide the right investment terms. Whether it is to calculate a suitable tenor option or compare interest rates, this online tool enables you to choose the best option.
This is why the tool is available on most FD providers’ websites. This way, you can quickly evaluate the terms online before finalising your FD scheme. Knowing different ways you can use it empowers you to choose the right terms and maximise your earnings.
Read on to know how to use a fixed deposit interest calculator and its benefits.
How Does the FD Calculator Work
An FD interest calculator has three columns with a toggle bar which you can move. You must enter your investment amount, interest rate, and tenor option in these columns. You can also manually enter the value for precision.
Remember that some calculators may have additional options, such as individual type and mode of interest payout. However, interest rate, the amount you plan to invest, and duration are available on all calculators.
After all, these 3 parameters play a crucial role in deciding your interest earnings. As mentioned earlier, there is a payout option you can select when you opt for a non-cumulative fixed deposit. When setting up your Fixed Deposit (FD), you can choose the frequency of payout options: monthly, quarterly, half-yearly, or annually. If you prefer a cumulative FD, you should select the ‘At maturity’ option, where the interest is compounded and paid out along with the principal at the end of the FD term.
Upon providing the required information, the calculator will automatically generate your details, such as interest earnings and maturity amount.
In case you are using the FD calculator at an issuer’s website, you can book a fixed deposit online if you are satisfied with the chosen terms. If not, you can change the terms by moving the bar or changing the value to get suitable terms for your investment.
Why Use an FD Calculator?
Now that you know how an FD interest calculator works, here are some reasons to use them before depositing your funds.
To Estimate Returns
Using this tool, you can review your estimated returns for the invested amount and tenor. If you are not comfortable with the terms, you have the option to change the numbers and get instant results. This helps you make informed decisions and maximise your returns.
To Compare Interest Rates
Since interest rates for FDs are subject to the policy of an issuer, they differ vastly across banks and Non-banking Financial Institutions (NBFCs). Thus, this tool helps you compare varying interest rates offered by issuers. Note that a higher interest rate translates to better returns, so choosing a higher FD rate is important.
To understand this better, consider an example where the invested amount and tenor remain fixed. If you invest ₹3 Lakhs for 46 months, here is how your payout changes at varying interest rates.
| Interest Rate | Total Interest | Payout |
| 8% p.a. | ₹1,08,146 | ₹4,08,146 |
| 8.5% p.a. | ₹1,15,757 | ₹4,15,757 |
| 9% p.a. | ₹1,23,474 | ₹4,23,474 |
| 9.5% p.a. | ₹1,31,298 | ₹4,31,298 |
| 10% p.a. | ₹1,39,230 | ₹4,39,230 |
Disclaimer: The rates and payouts are mentioned for illustrative purposes. The actual values may vary as per the issuer’s policy.
To Choose a Tenor
The interest rate and the total payout you receive are directly proportional to the tenor option. Since most banks offer a duration from 7 days to up to 10 years, you can choose any option you prefer. A fixed deposit interest calculator helps you decide on the maximum tenor you can choose so that you earn the highest returns.
Consider an example of ₹3 Lakhs at an interest rate of 10% p.a. to know its impact on your interest earnings and maturity amount.
| Tenor | Total Interest | Total Payout |
| 12 months | ₹30,000 | ₹3,30,000 |
| 18 months | ₹46,106 | ₹3,46,106 |
| 24 months | ₹63,000 | ₹3,63,000 |
| 30 months | ₹80,717 | ₹3,80,717 |
| 36 months | ₹99,300 | ₹3,99,300 |
Disclaimer: The rates and payouts are mentioned for illustrative purposes. The actual values may vary as per the issuer’s policy.
To Calculate Interest Payout
You may be investing in a fixed deposit to achieve a particular financial goal, such as for your children’s education or wedding, or to arrange travel expenses. You can decide on a favourable tenor option based on your goals and check the interest payout you stand to earn.
Benefits of Using an FD Calculator
Here are some reasons why using a fixed deposit interest calculator is better than manual calculations.
Easy to Use
It is not a complicated tool, as you simply need to enter a few details to compute your interest earnings and maturity amount.
Accurate Calculation
Unlike manual calculations, the chances of errors are negligible as the tool works on a fixed algorithm.
Time-saving Option
It gives you fast, accurate results, which can help you save time compared to time-consuming manual calculations.
Informed Decision
It helps you make an accurate prediction of your estimated payouts and returns, giving you the confidence to choose the right option.
Unlimited Usage Without Restrictions
When comparing multiple FD terms, you need to do calculations many times. Since there is no limit on how many times you can use it, it helps you make quick decisions.
Free-of-Cost
It is a free-to-use online tool which you can access effortlessly on the issuer’s website or other platforms.
With these perks in mind, it is clear that an FD interest calculator is a smart way to weigh your options. Most FD calculators give you the option to calculate interest for your cumulative and non-cumulative FDs in just a few clicks. This way, you can choose whether to earn a lump sum interest at maturity or opt for regular monthly, bi-monthly, quarterly or annual payouts.
