A Brief Guide for using Fixed Deposit Calculator

FD or fixed deposits are also called term deposits in the banking sector. These deposits are amongst the safest investment options for striking the correct balance in your financial investment portfolio. FD calculator is an instrument, which helps in looking for the correct balance in the sense of the amount to invest in the fixed deposit and the tenure of the deposit.

Let us learn about the features & benefits of a fixed deposit calculator in detail.

What does an FD calculator mean?

A fixed deposit calculator is an instrument, which is designed for getting an estimate regarding the maturity amount, which the investors must expect at the end of the selected term for a specific amount of deposit at the applicable interest rate.

This calculator is a tool that will help you in calculating the amount of interest you will be earning on an FD account. It makes use of the deposit amount, fixed deposit tenure, and rate of interest of the fixed deposit for calculating the amount of maturity. The maturity amount is the money you will be getting when the FD term ends. It includes the total rate of interest earned off the amount of principal or deposit amount.

How to make use of the FD calculator?

For using the fixed deposit calculator available, you need to follow the steps that are mentioned below. These are steps used in most of the calculators.

• Enter the amount of deposit in the 1^st field, which is the FD amount
• Enter the rate of interest in the next tab
• Enter the tenure of the deposit, which is the period for which you wish that the fixed deposit be active.

Note- You have the option to enter the duration of the fixed deposit in years or months.

Press the “calculate” button. An estimated maturity amount gets displayed on the FD calculator. You also have the option of checking the entire interest along with this amount of maturity.

Why should a person make use of the FD calculator?

Just as with any other financial decision, investment in an FD also leads to tickling of your budget and making it work in alignment with your financial objectives.

Fixed deposits are all about guaranteed returns and reducing the risks. In case you make an investment in the market (such as equity mutual funds), there will be a considerable risk. To a certain limit, the investment in the fixed deposit can help in absorbing losses. For this, you must know the amount of money to put in the fixed deposit account. This can be simply estimated by making use of the FD calculator.

This calculator also helps to compare the different kinds of FD schemes offered by the banks & other financial organizations. You can comprehend the schemes offered by the best returns within the desired term.

What are the benefits of using an FD calculator?

Some of the common and main benefits of using a fixed deposit calculator are listed below.

Making the complex calculations easy with the deposit amount, multiple tenures, rates, and amount, hence, saving effort and time.

No scope for any kind of errors because it is an automatic calculating tool.

This instrument is free of cost. Therefore, the customers have the option to use it many times and & compare returns for various combinations of fixed deposit tenure, amount, and rates.

What are the factors that impact the rates of interest of fixed deposits?

The banks and all the other financial institutions offering fixed deposit as an option for investment to the customers take the points mentioned below into consideration when deciding the rates of interest on FDs.

1. Applicant’s age

An FD offers preferential rates of interest (banks & other financial institutions) for senior citizens, which may range somewhere between 0.25% to 0.75% throughout the regular interest rate for the customers. For some of the banks and financial institutions, the age limit would be 60 years & above while some of the banks allow investors who are 55 years & above in the category of senior citizens.

1. Period and tenure of the deposit

The period or tenure of the deposit is the time duration for which the amount of deposit remains invested in the FD. This tenure varies from one bank to another and generally starts from seven days to ten years. Different tenures get different rates of interest on fixed deposits.

1. Present economic situations

The banks & other financial institutions offering FDs continue to correct the rates of interest according to the changes prevailing within the economy involving the change in rates and inflation. Hence, it is secured to say that the current economic situations have the potential of impacting the interest rates for the fixed deposits.

How is the rate of interest calculated on the FD calculator?

Generally, the interest on the fixed deposit with a tenure of six months or less can be calculated at the simple interest rate. The compounding of the rate of interest is done for the fixed deposits with a tenure of above six months. While going for the interest payout monthly, the banks usually calculate the interest on offer or discounted rates.