Everybody wishes to build a sizeable savings fund, but not everybody succeeds. All thanks to our lifestyle and purchasing behavior. That’s why, it’s important to invest in a savings scheme like fixed deposit.
If you are planning to invest in a fixed deposits, it’s highly suggested that you use a fixed deposit interest calculator.
We’ll be telling you all about an FD return calculator in this guide.
Many banks and NBFCs provide fixed deposits (FDs) as a sort of term investment. Subject to a few restrictions, these deposits often offer a greater rate of interest. The sum you deposit in an FD is secured for a defined duration of time, which might range from 7 days to 10 years. The interest rate for FDs is set at the time the deposit is opened and is unaffected by market movements. Some financial institutions even permit early termination of FDs for a fixed penalty cost. To calculate the interest and the amount that it will accumulate at maturity, utilize an online FD return calculator.
How Can a Fixed Deposit Interest Calculator Help You?
Now that you know what is a fixed deposit, it’s time to give you all the reasons why a fixed deposit interest calculator should be your go-to tool before you invest in a fixed deposit.
It can take some time and effort to calculate the maturity amount of an FD. One can calculate it quickly and easily using an online FD return calculator.
The calculations for FD maturity are intricate and involve several variables. With simply the push of a button, a fixed deposit interest calculator does all the work and provides you with precise figures. You can use it to speed up these time-consuming calculations.
You can compare the maturity amount and interest rates of FDs offered by various financial institutions using an FD return calculator.
When you have all the facts at your disposal, you can make a wise decision.
Factors Affecting Fixed Deposit Interest Rates
When choosing the FD interest rates, banks and other financial organizations that offer fixed deposits to customers take into account the following factors:
Duration or Deposit Period
The length of time that the deposit amount is invested in a fixed deposit is known as the tenure of the deposit period. This time frame varies from bank to bank and often lasts between seven days and ten years. Variable terms result in variable interest rates on fixed deposits.
The Applicant’s Age
Senior citizens can receive special interest rates on fixed deposits from banks and other financial organizations, which can vary from 0.25 percent to 0.75 percent above the standard rate of interest for consumers. Some banks have an upper age limit of 60 years, while others accept senior citizens who are 55 years of age or older as investors.
Current Economic State
Banks and other financial institutions that offer fixed deposits continuously adjust their interest rates in response to market conditions, including inflation and changes in the Reserve Bank of India’s (RBI) repo rate. Therefore, it is safe to assume that the current state of the economy can affect the interest rates for fixed deposits.
Why Should You Use an FD Return Calculator?
You should only invest in any plan after conducting careful analysis and research. Your investing goals must be met by the investment strategy. To determine whether the investment strategy satisfies your investment goals or not, you must utilize a calculator. By doing so, you will avoid any disappointments and unpleasant surprises in addition to making an informed selection. Once he has a certain financial objective in mind, he may choose which investment strategy to go with.
You may compare the various fixed deposits offered by various banks using a fixed deposit interest calculator. You can optimize your investment by comparing as each bank and NBFC offers a different interest rate.
A fixed deposit with a flexible duration that ranges from 7 days to 10 years is available for investment. You can modify the calculator to determine which FD period will result in the achievement of your desired goal.
Similar to this, you can change the payout period for the fixed deposit’s compounding term. Since the FD offers compounded interest rates, you should be aware of the best compounding period for your payout time.
You have two options for performing your calculations and analysis: by target amount and by investment amount. The investment amount strategy is used when you already have a specific investment amount in mind and want to know your level of maturity and financial success. The target amount technique forces you to do your analysis backward. Here, you receive the cash to be invested as output and are aware of the maturity amount you require after the FD term.
Fixed Deposit Calculation Formula
Fixed deposit interest can be computed in two different ways: simple interest and compound interest.
Simple Interest on Fixed Deposit
Simple interest is the interest earned during the investment term on the principal amount invested at the predetermined interest rate.
Formula for calculation
Simple Interest = (P x R x T) divided by 100
P- Principal amount invested
R- Rate of interest (%)
Compound Interest on Fixed Deposit
The interest earned on the principal invested and the interest earned is known as compound interest. The number of periods (years) over which interest will be compounded and multiplied by the invested principal is increased along with the interest rate.
Formula for calculation
A = P (1+r/n) ^ (n * t)
A = Maturity Amount
t = number of years
P = Principal amount invested
n = number of compounding annually
r = Rate of Interest (in decimals)