How Fixed Deposit is Calculated – FD Interest Calculation Theory | Bajaj Finance

## How is Fixed Deposit interest calculated?

Fixed Deposit (FD) is a reliable investment tool for preserving and growing savings. The rate of interest on your deposit depends on the tenor you choose, and the frequency of interest payouts.

The FD formula for calculation of interest is listed below:

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

Where,

• A is maturity amount
• P is principal amount
• r is rate of interest
• t is number of years
• n is compounded interest frequency

The interest payout on the FD’s maturity depends on the interest rate prorated by the bank and the frequency of payouts. The return on the principal amount invested is computed either as simple interest, whereby the interest is earned only on the principal amount, or as compound interest on the basis of which interest is compounded, i.e., interest is earned on both, the principal amount and accrued interest.

In the case of compound interest, the amount payable at maturity is higher, since interest is calculated on the principal amount and interest accrued on it. Use FD Interest Calculator.

### How to use FD Calculator to calculate interest?

Using the FD calculator is very easy, and all you have to do, is to input the fixed deposit amount and tenor to calculate the amount receivable at maturity. It helps you calculate both – cumulative and non-cumulative payouts.

It is easy to use, and all you need to do is fill in details about:

• Customer Type
• Type of fixed deposit
• Fixed deposit amount
• Fixed deposit tenor

The interest amount along with the total amount will hence, be reflected. It helps you save the manual work, and you can determine the return on your investment in no time.

### How are deposits calculated?

Calculating the return on your fixed deposit investment might seem tedious and off-putting when one has to deal with large numbers. But knowing the right way to estimate would allow one to have a higher pay off at the end of the tenure of the investment.

The interest payoff on FD’s maturity depends on the interest rate prorated by the bank and the frequency of payoffs. The return on the principal amount invested is computed either as simple interest, whereby the interest is earned only on the principal amount, or as compound interest on the basis of which interest is compounded, i.e., interest is earned on both, the principal amount and accrued interest.

In the case of compound interest, the amount payable at maturity is higher, since interest is calculated on the principal amount and interest accrued on it.

### How to maximise the returns on your deposit?

To maximise the returns on your deposit, it is important to know the factors affecting your FD interest and amount, which have been listed below:

• Deposit or principal amount: Higher deposit amount means higher interest.

• Deposit tenor: Longer tenor results in higher interest.

• Rate of interest: Higher percentage of interest rate yields greater interest amount.

• Type of deposit (Cumulative or Non-Cumulative): Cumulative FDs give better interest.

• Frequency of interest: Your interest can be compounded monthly, quarterly, half-yearly or annually with Bajaj Finance Fixed Deposits. However, frequent compounding of interest rates can decrease your interest amount.

• Mode of investment: While senior citizens get an additional rate benefit of 0.25%, there is also an additional rate benefit of 0.10% for online investors, who are less than 60 years of age.

Based on your convenience, and the above factors, you can choose the tenors, payout frequencies, deposit types and mode of investment to grow your savings. You can choose to invest in a Bajaj Finance Fixed Deposit to get attractive rate of interest, which can enable you to maximise the returns on your deposit.

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