Fixed deposits are considered to be one of the most traditional and trusted investment tools in India. Its risk-free nature, steady returns and flexible tenor have helped it to emerge as one of the most sought-after investment tools for both young and seasoned investors and individuals alike.
It must also be noted that the fixed deposit rate of interest is a major indicator of the profitability of different deposit schemes. Nonetheless, different financial institutions tend to offer a varying rate of interest for different tenors, and the easiest way of calculating the same is by using online tools like a fixed deposit calculator.
Fixed deposit calculator – in brief
An FD functions like a savings account, where individuals deposit a fixed sum of funds to generate returns over the tenor. The difference is that, fixed deposits come with a pre-specified maturity period and do not readily allow withdrawals of the fixed amount subject to certain withdrawal terms.
During such tenor, the sum invested accrues interest at a pre-fixed rate which remains unchanged during market fluctuations.
Calculating fixed deposit rates requires individuals to become familiar with its principle first. Typically, the amount of interest earned and the maturity value for a fixed deposit is calculated using the compound interest formula.
A = P x (1 + r/n) ^ t
I = A – P
A is the maturity value.
P is the Principal amount.
r is the rate of interest is the tenor.
n is the frequency of interest is compounded.
An effective financial tool like a fixed deposit interest calculator comes in handy to obtain error-free results instantly.
Steps to calculate fixed deposit interest
By following a few basic steps and sharing a few details, anybody can find out the accurate rate of interest and maturity value of different FD schemes.
For instance, if individuals opt to use the fixed deposit interest rates calculator of a financial institution like Bajaj Finance they would have to follow these following steps –
Step 1 – Visit the financial institution’s website.
Step 2 – Click on the ‘fixed deposit calculator option.’
Step 3 – Select the customer option; for example, new customer/existing customer/senior citizen.
Step 4 – Select the type of fixed deposit scheme; for example, the cumulative fixed deposit scheme/non-cumulative fixed deposit scheme.
Step 5 – Input details like the deposit amount and tenor.
Step 6 – After inputting all these essential details, users would have to click ‘calculate’ to obtain the requisite information.
While using such FD calculators, individuals should take note of the applicable rate of interest against each type of fixed deposit scheme. It will equip them with the requisite information for selecting a more suitable investment option.
Benefits of a fixed deposit interest calculator
Typically an FD calculator is a tool that is designed to help individuals calculate the returns on their deposit immediately and correctly.
Besides helping individuals to save their time, energy and money, a fixed deposit calculator proves useful in these following ways –
Convenient to use: Eliminates the need to do complex calculations manually and also help solve them instantly without much ado.
Quick and accurate: By eliminating the need for manual calculations, FD interest calculators also help to eliminate the risk of errors that are common in manual calculations. Users can acquire accurate results and are better equipped with the correct information relating to the maturity value and accrued interest on their investment.
Helps to compare: It offers users the ease to compare different fixed deposit schemes, and their rates of interest quickly and more conveniently. This further helps them to choose the most suitable deposit scheme easily and without going through a lot of hassles.
Subsequently, individuals must make it a point to take a note of the pros and cons of investing in different fixed deposits to choose the best option.
Also, opting for a fixed deposit of a trusted financial institution would make the investment more safe and profitable. For instance, the fixed deposit extended by Bajaj Fianance is FAAA rated by CRISIL and indicates the highest quality of credit and safety. All of which are among the potent reasons to invest in fixed deposits.
Lastly, individuals should use a trusted fixed deposit interest calculator to ease the process of choosing the most suitable investment scheme for themselves.