How Fixed Deposit Interest is Calculated?

How fixed deposit interest is calculated using simple and compound interest methods. Estimate your FD maturity amount based on tenure and interest rate.
Open FD
How is fixed deposit interest calculated
OPEN FD
4 mins
Aug 22, 2026

Understanding how fixed deposit interest is calculated helps you estimate potential earnings and the maturity amount before investing. The calculation generally considers the principal amount, applicable interest rate, tenure and payout option. For cumulative deposits, interest is added to the principal as per the applicable compounding frequency. For non-cumulative deposits, interest is paid at the selected intervals. Comparing these factors can help you assess returns and select a suitable deposit tenure for your financial goals.


How does FD work?

A Fixed Deposit (FD) allows you to deposit a lump sum amount with a bank or financial institution for a fixed tenure at a predetermined interest rate. The deposited amount earns stable returns throughout the tenure, and the interest can be received periodically or at maturity depending on the selected payout option.

 

Types of interest on Fixed Deposits

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!

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Up to 0.35% p.a. extra interest offered for senior citizens
  5. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

By proceeding, you agree to our Terms and Conditions

How to calculate interest on Fixed Deposits?

Understanding how fixed deposit interest is calculated can help you compare FD options better and estimate your maturity amount accurately. While the basic concepts of simple and compound interest are easy to grasp, knowing 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!

Fixed deposit variants

Highest Credit Ratings | Trusted with over 1.4 million Deposits | Assured Returns on FD
Recommended

Fixed Deposit - 60 Months

INTEREST RATES UP TO
7.75% p.a.
Invest Online

Fixed Deposit - Senior Citizen

INTEREST RATES UP TO
7.75% p.a.
Invest Online

Fixed Deposit - Age below 60

INTEREST RATES UP TO
7.40% p.a.
Open FD

Fixed Deposit - Minor

INTEREST RATES UP TO
7.40% p.a.
Open FD

Fixed Deposit - HUF

INTEREST RATES UP TO
7.40% p.a.
Open FD

Fixed Deposit - Sole Proprietor

INTEREST RATES UP TO
7.40% p.a.
Open FD

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.
  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.

Pro tip

Bajaj Finance offers attractive Fixed Deposit interest rates of up to 7.40% p.a. for non-senior citizens, and up to 7.75% p.a. for senior citizens, inclusive of an additional rate benefit of up to 0.35% p.a.

systematic-deposit-plan-pro-tip-banner

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.


Calculate your expected investment returns with the help of our investment calculators

Investment Calculator
Sukanya Samriddhi Yojana CalculatorPPF CalculatorGratuity Calculator
Recurring Deposit CalculatorProvident Fund Calculator 

Frequently asked questions

What parameters are used to calculate interest on FD?

Parameters for FD interest calculation include the principal amount, tenure, the applicable interest rate, and the payout frequency.

How to calculate FD interest rate using an online calculator?

To calculate FD interest rate with an online calculator, input the type of customer (senior citizen or customer below the age of 60), principal amount, tenure, interest rate, and choose the compounding frequency (monthly, quarterly, annually) if applicable.

Why is it important to understand how fixed deposit interest is calculated?

Understanding FD interest calculation is crucial for estimating returns, comparing investments, and making informed financial decisions.

What is the difference between the calculation of simple interest and compound interest?

The main difference is that simple interest is calculated only on the principal amount, while compound interest includes interest on interest.

Is FD interest credited monthly?

FD interest can be credited monthly, quarterly, or annually, depending on the terms of the FD.

How does the FD interest rate work?

FD interest rate is the annual percentage return offered by the bank, and it determines the interest earned on the principal amount over the investment tenure.

How do I calculate monthly returns from a fixed deposit investment?

Monthly returns from a fixed deposit depend on the principal, applicable interest rate, tenure and payout frequency. For a non-cumulative FD with monthly interest payouts, the monthly interest can generally be estimated using the principal and applicable annualised rate. For example, a Rs. 1,00,000 deposit at 7% p.a. would generate approximately Rs. 583 monthly before applicable taxes, subject to the FD’s terms.

Show More Show Less

Related Videos

0

Bajaj Finance app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finance App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finance App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finance App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.