# How to Calculate Fixed Deposit Interest?

When it comes to money, people always choose the safest option. Although many investment options offer greater interest rates, depositors rely on an FD (Fixed Deposit) as it is the safest type of investment with a fixed interest rate. However, it is good to calculate interest on fixed deposits before investing with different banks and NBFCs (Non-Banking Financial Companies). Read on to discover the ways to calculate a fixed deposit’s interest.

In banks, anyone with a savings account can open an FD. In NBFCs like Shriram, you can book an FD without opening an account with them. However, you should present necessary documents that verify KYC.

##### What is a Fixed Deposit?

A fixed deposit is an easy one-time investment where you can deposit a lump sum for a fixed tenure and reap matured rewards accordingly. Besides, the respective deposit will earn a fixed interest. In the end, you will get your principal amount and the accrued interest. A fixed deposit can be made as low as Rs.1000 and for a minimum of 7 days.

##### Quick Steps to Calculate Fixed Deposit Interest Rate

Any calculation is tedious and complex, but understanding to calculate an FD interest will help you make wise investment decisions. There are two methods to calculate an FD;

•         Simple Interest
•         Compound Interest

Banks and NBFCs choose between these methods considering the tenure and amount of the deposit. But what’s the difference between them?

Interest in the simple interest method is calculated on the principal amount. However, interest is calculated on both the principal and interest amount with compound interest.

##### Simple Interest

Simple interest calculation is the easiest of both. You only have to multiply the principal, fixed interest rate and tenure. Principle X Rate of Interest X Tenure divided by 100, i.e. (PxRxT/100)

Let us now try this calculation with actual numbers.

If you invest Rs. 20,000 at 10% per annum for 5 years, your FD interest will be calculated in the following way.

Step 1: 20,000 x 10 x 5 = 10,00,000

Step 2: 10,00,000/100 = 10,000

Therefore, the interest rate for the amount you invested is Rs.10000

##### Compound Interest

Compound interest calculation is profitable among fixed deposit interest calculations because you earn interest on your principal amount and the interest. Several banks and NBFCs offer compound interest, but you have to ensure you get reasonable interest rates.

The simple formula for compound interest calculation is P {(1 + i/100)n – 1}

Where, P = Principal; n = Number of years; i = Rate of interest per period

Let us try with an example. If you invest Rs. 20,000 at 10% per annum for 5 years, your FD interest will be calculated in the following way.

Step 1: 20,000 x 10 x 1/100 = 2,000 [For year 1]

Step 2: 22,000 x 10 x 1/100 = 2,200

Now your interest amount is Rs. 2,200. This amount will be added to the principal amount, and we can calculate the same for the next three years. Whereas certain banks calculate compound interest monthly, quarterly and half-yearly. So you can use the simple formula P {(1 + i/100)n – 1} to get the accurate interest rate for your fixed deposit.

So the total maturity amount is Rs32,210

##### Fixed Deposit Interest Calculator

An FD interest calculator is a tool to estimate the maturity amount with a specified rate of interest you can expect at the end of your tenure. It also calculates the interest you would earn on a fixed deposit.

##### How to Calculate FD Using Shriram’s FD Calculator?

1.   Enter the principal amount you are ready to invest
2.   Enter the period according to your feasibility.
3.   Click the “Invest Now” button to see your FD maturity amount (principal + interest amount).
##### Advantages of using Shriram’s FD Calculator

Shriram’s FD calculator is the most reliable fixed deposit interest calculator to help you plan and invest your money. Here are a few significant advantages of using Shriram’s FD calculator;

•         Shriram’s FD calculator is easy and helps you compare different FD plans of your choice.
•         Shriram’s FD calculator is free and can be used any number of times.
•         Shriram’s FD calculator shows you the exact amount of return so you can plan your investment accordingly.
###### FAQs – FD Calculator Online

Here are some answers to clarify your queries using an FD interest calculator.

##### 1.   How to use an FD calculator?

Enter all the necessary details of your investment on the respective slots of the calculator. Then click “calculate” to see the maturity amount according to your principal, interest rate, and tenure.

##### 2.   Why to calculate the maturity amount for an FD?

An FD interest calculator is the best choice to calculate the maturity amount for an FD. It calculates the maturity amount based on your choice of amount, tenure and interest rate.

##### 3.   How is fixed deposit interest calculated?

You can calculate a fixed deposit using two methods;

•       Simple Interest
•       Compound Interest
##### 4.  What is Shriram’s fixed deposit interest rate calculator?

Shriram’s FD interest rate calculator is a credible interest rate calculator to use while investing in FD. It shows the exact maturity amount to help you make a wise investment choice.

##### Calculate & Invest Wisely

Calculating FD before investing will help you make wise decisions. However, using an FD calculator to estimate your fixed deposit will help you decide on the best type of investment with the banks and NBFCs according to your feasibility.

So check out Shriram’s FD Calculator to calculate your FD and make the right investment decision today.