FD Calculator
Maturity value of a fixed deposit with quarterly compounding, the standard at most banks.
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How fixed deposit returns are calculated
A fixed deposit locks a sum with a bank for an agreed term at an agreed rate. Unlike market-linked investments, the return is contractual — barring bank failure, you will receive exactly what was agreed. That certainty is the product's entire appeal, and it is why FDs remain the default savings vehicle for a large share of households.
Most Indian banks compound FD interest quarterly, which is the convention this calculator uses:
A = P × (1 + r/4)4t
Where P is the deposit, r is the annual rate as a decimal, and t is the tenure in years. Quarterly compounding means the effective yield is slightly higher than the headline rate — a 7% FD actually returns about 7.19% effective annually.
A worked example
Deposit 5,00,000 for five years at 7%. With quarterly compounding the maturity value comes to approximately 7,07,400, of which 2,07,400 is interest. The same deposit under simple interest would have earned only 1,75,000, so compounding adds roughly 32,400 over the term.
Note what happens with tenure. The same deposit for ten years reaches about 10,00,800 — the money roughly doubles. For FDs, the rule of 72 applies neatly: at 7%, expect a doubling in a little over ten years.
Cumulative versus non-cumulative
This calculator models a cumulative FD, where interest is reinvested and paid out as a single sum at maturity. Banks also offer non-cumulative FDs that pay interest monthly, quarterly, or annually into your account. Non-cumulative deposits return less overall because the interest never compounds, but they suit retirees and anyone who needs the income stream rather than a lump at the end.
Things that will reduce your actual return
- Tax. FD interest is added to your income and taxed at your slab rate. Banks deduct TDS once annual interest crosses the threshold. For a taxpayer in a higher bracket, a 7% FD can net closer to 4.9% after tax — which may be below inflation.
- Premature withdrawal penalty. Breaking an FD early usually means the bank recalculates interest at the rate applicable to the period actually held, minus a penalty of around 0.5–1%. Laddering several smaller deposits with staggered maturities avoids having to break one large one.
- Inflation. If your FD earns 7% before tax and inflation runs at 6%, the real gain is thin. FDs preserve capital reliably; they build wealth slowly.
Who FDs suit
Money you will need within one to three years, emergency reserves beyond your immediate savings account, and any capital where a loss would be genuinely damaging. For goals more than seven years out, the near-certain erosion of purchasing power makes an FD-only approach hard to justify. The comparison worth running is this calculator against the SIP calculator for the same monthly amount and term.
Frequently asked questions
How is FD interest calculated in India?
Most banks compound quarterly. Interest is credited to the deposit every three months and subsequently earns interest itself, so the effective annual yield is slightly above the advertised rate.
Is FD interest taxable?
Yes. It is added to your total income and taxed at your applicable slab rate. Banks deduct TDS once interest from deposits with them exceeds the annual threshold, and you can submit Form 15G or 15H if your total income falls below the taxable limit.
What happens if I break an FD early?
The bank generally recalculates your interest at the rate that would have applied to the period you actually held the deposit, then applies a penalty of roughly 0.5% to 1%. You keep your principal, but the return is materially lower than the contracted rate.
Are senior citizens paid a higher rate?
Most banks offer an additional 0.25% to 0.75% to depositors above 60. Enter the higher rate directly into the calculator to see the difference it makes.
How safe is a fixed deposit?
Deposits with scheduled banks in India are insured by the DICGC up to 5 lakh per depositor per bank, covering principal and interest combined. Spreading larger sums across multiple banks keeps everything within the insured limit.
Cumulative or non-cumulative — which should I choose?
Choose cumulative if you do not need the income and want the highest maturity value, since interest compounds. Choose non-cumulative if you need regular payouts to live on, accepting a lower total return.