How to use FD Calculator
- Enter the principal amount.
- Enter the annual interest rate the bank quotes.
- Set the tenure in years.
- Read the maturity value, total interest and the year-by-year growth.
- Compounding is quarterly, the standard for Indian bank fixed deposits.
- The maturity figure is before tax; FD interest is taxed at your income slab rate.
- Senior citizens typically receive 0.25% to 0.50% above the standard rate.
Quarterly compounding is why the return beats the headline rate
A 7% FD does not pay 7% a year. Interest is compounded quarterly, so the effective annual yield is (1 + 0.07/4)⁴ − 1 ≈ 7.19%. Over five years on ₹1,00,000 that difference is several thousand rupees against simple annual compounding. Banks advertise the nominal rate, so comparing two deposits means comparing effective yields — and a deposit compounding monthly beats one compounding quarterly at the same nominal rate, which is worth checking rather than assuming.
Cumulative and non-cumulative are different products
A cumulative FD reinvests the interest and pays everything at maturity, which is what this calculation models and what maximises the return. A non-cumulative FD pays interest out monthly, quarterly or annually, so nothing compounds and the total is lower — chosen by people who need the income stream, typically retirees. If you are comparing quoted maturity values between banks, check you are comparing the same type.
Tax is deducted at source and is not optional
Interest on an FD is fully taxable as income at your slab rate. Banks deduct TDS at 10% once interest across your deposits with them exceeds ₹40,000 in a financial year, or ₹50,000 for senior citizens, and at 20% if PAN is not provided. TDS is not the final tax — if your slab is higher you owe the difference at filing, and if your total income is below the threshold you can file Form 15G or 15H to avoid deduction. The maturity figure here is pre-tax.
Breaking an FD early costs more than the lost interest
Premature withdrawal usually attracts a penalty of 0.5% to 1%, and — the part people miss — the interest is recalculated at the rate applicable for the period actually held, not the rate you booked. Break a five-year deposit at eighteen months and you earn the eighteen-month rate minus the penalty, which can be substantially less than expected. Laddering several smaller deposits with staggered maturities gives access to some of the money without breaking all of it.
Frequently asked questions
How is FD interest compounded?
Is FD interest taxable?
What is the difference between cumulative and payout FD?
How is FD interest calculated?
What happens if I break an FD early?
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