A fixed deposit** **is a financial tool provided by various banking institutions. It is one of the safest investments to park your savings securely. This is because the tenure period is flexible and it ensures high returns on investments. But before investing in an FD, you must know how much should be invested along with considering the rate of interest and tenure. To be accurate about these factors, you can use an FD rate calculator. It can help you calculate your fixed deposits without requiring much effort or time.

## What is an FD Calculator

Fixed deposits allow you to invest a lump sum and earn interest on the amount throughout a selected tenure. When the tenure ends, you receive the principal amount along with the accrued interest. An **FD calculator** is an instrument that helps to calculate the amount that a fixed deposit will generate at the time of maturity. It computes the numbers using the deposited amount, interest rate, tenure, and other details. The FD calculator can be used to calculate both cumulative and non-cumulative fixed deposits.

## Way to use an FD Calculator

Depending on the type of fixed deposit account, i.e., cumulative account and non-cumulative account, you can use an FD rate calculator in the following ways.

### Cumulative Account

- Updated the date of the account was opening.
- Feed the deposited amount.
- Enter the tenure either in months or years.
- Tap the on the calculate button.
- The maturity amount will be then shown in the table beneath the calculator tool.

### Non-Cumulative Account

- Enter the opening date of the account.
- Enter the deposit sum, which can be anywhere between Rs. 500 to Rs. 10,0000.
- Select the duration of the interest payout.
- The time period can be entered in days, months, or years for reinvestment or quarterly or monthly payout.
- Enter the interest rate per annum.
- Click on the calculate button.
- Your maturity value will be calculated along with the date of maturity.

## Reason to use an FD Calculator

Any kind of investment requires considering the budget. The amount to be invested must also adhere to the investor’s financial aims. FD investment is no exclusion. To see if the FD investments can fulfill your financial requirements, you must find out what amount you will receive at maturity. The FD calculator can be helpful in this matter. It also allows you to compare the schemes and interest rates of different banks and institutions. You can have a good idea of which scheme will be most beneficial for you.

## Benefits of an FD Calculator

**Some of the benefits of using an FD calculator are: **

- As it is an automated calculator there is no scope to make any errors.
- Save you from going through complicated calculations.
- Time-saving and convenient.
- It can calculate multiple amounts, rates, and tenure.
- The calculator can be used for free online.
- Individuals can use it as many times as they want.
- It can be used to compare different FD schemes, interest rates, and tenure.

## The procedure of FD interest rate calculation

**There are two ways to calculate the rate of interest, which are given below. **

### Simple interest

It is the interest received against an amount based on an interest rate and a specific period. To calculate the simple interest, the principal is multiplied by the annual interest rate and the time for which the money is invested.

#### P*R*T/100

#### P= Principal

#### R= Rate

#### T = Time

For instance, Rs. 20000 was invested at 5% interest P.A for 4 years then the amount to be received at maturity will be,

Simple interest = 20000*5*4/100 = Rs. 4000

Total returns= Rs. 20000 + Rs. 4000= Rs.24000

**Compound Interest**

It is the interest earned on both the principal amount and accumulated interest. To calculate compound interest, the principal is multiplied with the rate of interest, along with the number of durations. The time period is calculated in years and the interest gets compounded.

#### A= P (1+r/n) ^ (n * t)

#### Here,

#### A= Amount

#### P= Principal

#### r= interest rate

#### n= Number of compounding in one year

#### t= time period in years

For instance, if an amount of Rs.5000 is invested for 10 years at a 5% compound interest rate, then during the time of maturity,

A= 5000 (1 + .05/12) ^ (12*10)

A= 5000

(1+ 0.5/12) ^ 120

A= Rs. 8235.05

So the total amount you will receive after 10 years Rs. 8235.05

If you are thinking of investing in a fixed deposit, try using the FD calculator. It will save both your time and effort.

#### Also read Do You Know About These 7 Factors That Impact a Mortgage Loan?

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