A Fixed Deposit (FD) is one of the most popular savings options in India. Before you lock money in a bank FD, you should know exactly how much interest you will earn and what the maturity amount will be.
How FD interest is calculated
Banks use compound interest on fixed deposits. Interest is added to principal at regular intervals — quarterly, half-yearly, yearly or at maturity depending on the scheme.
Maturity Amount = P × (1 + r/n)n×t
- P = Principal (deposit amount)
- r = Annual interest rate (decimal)
- n = Compounding frequency per year (4 = quarterly)
- t = Tenure in years
Example: ₹5 lakh FD at 7% for 5 years
- Principal: ₹5,00,000
- Rate: 7% p.a., quarterly compounding
- Tenure: 5 years
- Maturity: approx. ₹7,05,000 (use calculator for exact bank figure)
Interest earned = Maturity amount minus principal. Senior citizens often get 0.25–0.50% extra rate — always check your bank's latest slab.
FD vs other options
- FD — safe, fixed return, ideal for short to medium goals
- RD — monthly deposits instead of lump sum
- PPF — long-term tax-saving with EEE benefit
Planning tips
- Compare rates across banks and NBFCs before booking.
- Check premature withdrawal penalty and loan against FD rules.
- TDS applies if interest exceeds ₹40,000/year (₹50,000 for seniors).
- Ladder FDs across tenures for liquidity and rate benefit.
Use Master Calc FD Calculator
Open our free FD Calculator — enter amount, interest rate, tenure and compounding frequency to see maturity value and total interest instantly. No signup, works on mobile.
FAQ
Is FD interest taxable? Yes. Interest is added to your income and taxed per your slab. TDS may be deducted by the bank.
Which compounding is best? More frequent compounding (e.g. quarterly) gives slightly higher returns than yearly at the same rate.
Disclaimer: Rates vary by bank and date. Results are estimates for planning only.