One of the most prudent, stress-free, and easy-to-understand investment schemes available to investors for decades is fixed deposits (FD). Indians have been traditionally putting their savings in fixed deposits for years as it is one of the safest investment instruments. FDs still continue to attract investors of all ages with the attractive interest rates and safety of the investment they offer. Since bank fixed deposits are backed by the Reserve Bank of India (RBI), they provide a sense of security and trust to investors. Let us find out everything about fixed deposits and how investors can use a fixed deposit interest calculator to calculate FD interest returns.
Features of a Fixed Deposit Scheme
Some features of a fixed deposit scheme that benefit a depositor are:
- Fixed deposit schemes are not affected by fluctuations in the equity market, economy, or domestic or international political ups and downs. The interest rates of a fixed deposit scheme are fixed at the time of opening a fixed deposit account, and they remain unchanged throughout the life of a fixed deposit.
- The tenure of a fixed deposit is flexible and an investor can put his money in an FD scheme depending on his investment horizon. Leading banks like RBL Bank Ltd. offer FD schemes for a period between seven days and 20 years.
- The interest returns on a fixed deposit scheme are higher than a savings account, but offer the same level of security on the investor’s funds.
- The investor has the flexibility of choosing the interest payout pattern. He can choose between getting regular interest payouts monthly, semi-annually, or annually, or can let his principal and interest compound till maturity for better returns.
How Does a Fixed Deposit Account Work
When an investor opens a fixed deposit account, they lock their money with the bank for a fixed tenure. The bank pays the interest on the deposit amount, and the FD holder has the option to withdraw the interest from time to time, or let it compound till maturity. An investor can ladder their investment in fixed deposits by opening multiple FD accounts with varying maturity periods. It is possible to choose the tenure of different fixed deposit schemes based on financial goals. The interest receivable on fixed deposits varies based on the amount invested, the tenure of investment, and some special schemes, like Senior Citizen FDs. An interest rate calculator for FD shows how the amount of interest a given invested amount can fetch.
Fixed Deposit Interest Calculator
An interest rate calculator for FD tells the amount the bank will pay an investor at the end of a pre-decided period. Before an individual deposits his money into an FD scheme, they can use the fixed deposit interest calculator to calculate their earnings on the investment. In simple words, an interest rate calculator for FD shows how much money an investor has earned and how much he has saved.
Advantages of a Fixed Deposit Interest Calculator
- It helps the investor decide the appropriate term of investment based on the maturity amount desired.
- The calculator helps the customer compare the interest returns from different banks to choose the best fixed deposit scheme.
- The calculations using an interest rate calculator for FD are accurate and instant.
- By comparing different maturity amounts, an investor can make a more informed decision about the renewal of his FD.
How to Use an FD Calculator
- Enter the amount you want to deposit.
- Enter the rate of interest applicable as per the scheme.
- Enter the duration for which you want to make the deposit.
The FD calculator instantly shows you the result for various combinations of the above factors.
Eligibility Criteria for Opening a Fixed Deposit Account
The following category of people are eligible to open a fixed deposit account:
- Non-Resident Indians
- Senior Citizens
- Companies
- Hindu United Families
- Partnership firms
- Registered clubs and societies
- Individuals or Groups of Investors
Types of Fixed Deposit Schemes
Fixed deposits offer a variety of schemes under which an investor can deposit his money. These FD schemes offer a host of benefits to investors and high-interest returns. The various FD schemes under which you can deposit your money are:
- Regular fixed deposit
- Flexi sure fixed deposit
- Tax-saving fixed deposit
- Senior citizen fixed deposit
- Super senior citizen fixed deposit
- Recurring Deposit
Fixed deposits allow you to watch your money grow without having to constantly worry about the security of your money.