How fixed deposit interest is calculated?

Curious about how FD interest is calculated? Knowing this helps you plan better, whether it’s for short-term goals or long-term savings. It ensures clarity when comparing returns across amounts and tenures—making your investment decisions smarter and more informed.
If you are thinking of investing in a safe and secure investment option but not sure if you will get inflation-beating returns?
Check FD Rates offered by Bajaj Finance (Up to 7.75% p.a.) and invest confidently in just a few clicks.

Key pointers

• Learn the difference between simple and compound interest to compare returns more accurately across FD tenures and types.
• Cumulative FDs reinvest your earnings, allowing your money to earn interest on interest—ideal for long-term wealth creation.
• The Bajaj Finance FD Calculator helps you estimate maturity value and compare different FD scenarios instantly and accurately.
• Your FD interest rate depends on tenure, customer type (senior citizen or not), payout mode, principal amount, and issuer credibility.

Use techniques like FD laddering, choosing cumulative options, and leveraging senior citizen rates to optimise your returns safely.

FDs offer two ways to earn interest—Simple Interest and Compound Interest. Let’s break them down.

Simple Interest: Straightforward and predictable

Here, interest is calculated only on your principal amount. It stays the same throughout the FD tenure and is paid out monthly, quarterly, or yearly.

Example:

• Principal (P): Rs. 1,00,000
• Interest Rate (R): 6% p.a.

• Tenure (T): 2 years 

  
  

  Formula:

  SI = (P × R × T) / 100 = (1,00,000 × 6 × 2) / 100 = Rs. 12,000

  So, for a Rs. 1 lakh deposit at 6% p.a. for 2 years, you earn Rs. 12,000 in interest.

  
  

Compound Interest: Where your money earns on itself

Compound interest grows your money faster. You earn interest not just on your principal, but also on the interest you’ve already earned. It’s ideal if you’re not withdrawing periodically.

Example:

• Principal (P): Rs. 1,00,000
• Interest Rate (R): 6% p.a. (compounded annually)

• Tenure (T): 2 years

  
  

  Formula:

  A = P(1 + R/N)^(N×T)

  A = 1,00,000 × (1.06)^2 ≈ Rs. 1,12,360

  Compound Interest Earned = Rs. 12,360

  
  

Why compound interest wins? 

Because as per the above given example you earn Rs. 360 more than simple interest over the same tenure. That adds up over time! 

Did you know Bajaj Finance offers FD interest payout options like monthly, quarterly, half-yearly, yearly or on-maturity! 

So, what are you waiting for? Open an FD now!

While the basic concepts of simple and compound interest are easy to grasp, understanding the exact calculation formulas will help you make more informed investment decisions.

Simple Interest Formula

SI = (P * R * T) / 100

Where:

• P = Principal amount invested
• R = Annual interest rate

• T = Tenure in years

  
  

  This formula is mostly used for non-cumulative FD, where interest is paid out periodically (monthly/half-yearly/quarterly/yearly) instead of being reinvested.

Compound Interest Formula

A = P(1 + (R/N))^(N*T)

Where:

A = Total Amount

P = Principal Amount

R = Rate of Interest

N = Number of times interest is compounded per year

T = Time Period in years

To get the interest earned, subtract the principal:

CI = A – P

Compound interest is used in cumulative FD, where interest is reinvested to earn more over time.

Want to grow your money faster without risk? Compounding is your best friend. Check FD Rates offered by Bajaj Finance (up to 7.75%) and see how your money can snowball over time.

Why use an FD Calculator?

Manual calculations can be error-prone, especially when dealing with multiple tenures or interest-compounding frequencies. An Fixed Deposit Calculator does the math instantly and gives you a clear view of:

• Final maturity amount
• Interest earned
• Monthly/quarterly income (for non-cumulative FDs)
• Comparison across tenures and payout options

This helps you tweak your investment plan based on your financial goals.

Are you Planning for a big expense in 3.5 years? 

Get up to 7.75% p.a. on FDs offered by Bajaj Finance and achieve your financial goals with ease. Open an FD account in minutes!

How to use Bajaj Finance FD Calculator?

It’s super easy and free. Here’s how you can use the FD calculator on our website:

1. Enter the amount you want to invest (minimum Rs. 15,000).
2. Choose the customer type (e.g., Senior Citizen or Regular).
3. Select your preferred tenure (from 12 to 60 months).
4. Pick your payout frequency – cumulative or monthly/quarterly/half-yearly/yearly.
5. View results instantly: The calculator will display your maturity value and total interest earned.

Want to get more from your money? Try different scenarios—adjust tenure, switch to monthly payout, or see how senior citizen rates impact your returns.

Benefits of Using Bajaj Finance FD Calculator

The Bajaj Finance FD Calculator simplifies your investment planning by instantly showing the maturity value and interest earned on your fixed deposit. You can input different amounts, tenures, and payout options to compare returns easily. It eliminates guesswork, helps you make informed decisions, and ensures you choose the FD plan that best fits your financial goals—saving both time and effort.

Did You Know? 

With Bajaj Finance FDs, you can earn up to 7.75% p.a. as a senior citizen—one of the highest in India today.

Ready to grow your savings? Check Eligibility now and lock in high interest.

What factors affect FD interest rates?

FD interest rates may seem fixed, but several key factors influence the final rate you get. Understanding these will help you make better decisions.

1. Customer Type

Senior citizens usually enjoy high FD interest rates than regular investors. At Bajaj Finance, this can go up to 7.75% p.a., helping retirees earn more from their savings.

2. Tenure Chosen

Longer tenures usually offer better rates due to compounding benefits. However, there’s often a sweet spot—FDs between 12 to 60 months tend to yield the most optimal returns.

3. Payout Option (Cumulative vs Non-Cumulative)

• Cumulative FDs: Interest is reinvested and paid on maturity—great for wealth creation.
• Non-cumulative FDs: Regular payouts (monthly/half-yearly/quarterly/yearly)—best if you want passive income.

Prefer passive income or looking to save tax as a senior citizen? Explore FD Options tailored to your life goals.

4. Principal Amount

Some issuers offer preferential rates for higher investments (e.g., Rs. 5 lakh+). Even a small increase in principle can significantly impact your final corpus due to compounding.

5. Issuer’s Credit Rating

FDs from institutions with high CRISIL and ICRA ratings are safer. Such ratings reflect credibility but may slightly vary in rates compared to riskier options.

Bajaj Finance FD are rated [ICRA]AAA(Stable) and CRISIL AAA/STABLE, meaning your money is in reliable hands.

How to maximise returns from your FD?

Here are some practical tips to make the most out of your fixed deposit investment:

• Ladder your FDs: Invest in multiple FDs with varying tenures to gain liquidity + maximise returns.
• Choose cumulative payouts if you don’t need regular income—compounding can boost your corpus.
• Leverage senior citizen rates if eligible—this can add up to 0.35% extra annually.

• Use FD calculators to compare different scenarios and avoid guesswork.

  
  

Ready to take the next step towards maximising your returns? Open FD Account with Bajaj Finance online in under 5 minutes and get up to 7.75% p.a. interest—no paperwork, no branch visits.

Final Thoughts

FDs remain one of the safest and most predictable investment options in India. Whether you're a first-time investor or a retiree looking for steady income, fixed deposits help you meet your financial goals without the stress of market volatility.

Take control of your savings journey today. Open FD Account to start earning smarter.