Fixed Deposit Calculator

A Fixed Deposit (FD) is a secure investment product offered by banks and financial institutions. You deposit a lump sum amount for a fixed period, earning interest at a predetermined rate. Unlike mutual funds or stocks, FDs are low-risk and guarantee your principal along with fixed returns. Typical FD interest rates are lower than market-linked investments, but the benefit is certainty. FDs are ideal for risk-averse investors, retirement planning, and short-to-medium-term savings goals. They also offer flexibility in tenure, from 7 days to 10 years, and can be tailored to meet specific financial targets.

The interest on an FD is calculated using the formula: Maturity = P × (1 + R/n)^(n × t), where P = principal, R = annual interest rate (decimal), n = number of compounding periods per year, and t = tenure in years. Most banks offer quarterly compounding, which slightly increases the effective interest earned compared to annual compounding. For example, a ₹1 lakh FD at 7% p.a. for 3 years compounded quarterly will earn slightly more than simple interest because the interest itself accrues interest every quarter. Understanding this formula helps investors compare banks and choose better compounding options.

Certain FDs, called tax-saving FDs, qualify for deductions under Section 80C up to ₹1.5 lakh annually. They usually have a minimum tenure of 5 years. While the principal invested is eligible for tax deduction, the interest earned is taxable as per your income slab, so it’s important to plan accordingly. Tax-saving FDs are ideal for conservative investors looking for guaranteed returns with some tax benefit, unlike other tax-saving instruments like ELSS which carry market risk.

Early withdrawal or breaking an FD can reduce your returns due to penalties or lower interest rates. Banks may apply a reduced interest rate for the period the deposit was active, which could be significantly lower than the booked rate. It’s important to read the FD terms before investing, especially if you might need liquidity. Planning your FD tenure carefully helps avoid unnecessary penalties and ensures you maximize interest.

Most banks do not allow topping up an existing FD. If you want to deposit additional funds, you need to open a new FD. Some banks provide 'top-up' FDs, which allow increasing the principal during the tenure, but these products often have conditions or different interest rates. Investors should check bank policies carefully before investing additional amounts to ensure they get the expected returns.

FD interest can be credited quarterly, annually, monthly, or at maturity, depending on the type of deposit. Quarterly interest crediting allows reinvestment of the earned interest, compounding your returns faster. Choosing the right interest payout frequency can have a meaningful impact on overall returns. For example, opting for cumulative (maturity) interest is convenient if you don’t need regular payouts, while monthly or quarterly payouts can help supplement monthly income.

Yes, the interest earned on FDs is fully taxable as per your income slab. Banks may also deduct TDS if interest exceeds a specific threshold (currently ₹40,000 per year for individuals). For senior citizens, this threshold is higher. While FDs provide guaranteed returns, you should factor in taxes when calculating net gains. Some planning strategies, such as opening FDs in family members’ names within exemption limits, can help optimize tax efficiency.

Yes, FDs can be opened jointly with one or more people, commonly with a spouse or close family members. Joint FDs allow shared access, and nominee details must be defined at the time of opening. This is useful for family savings, estate planning, or ensuring financial security for dependents. Interest is typically taxed in the hands of the primary holder, but joint holders should check tax rules carefully.