In short
A fixed deposit (also called a term deposit or certificate of deposit) locks a lump sum away for a set term at a fixed rate. This calculator shows what it is worth at maturity and how much interest it earns, for the compounding frequency your bank uses.
How fixed deposit interest works
Many banks add interest every quarter, and the interest then earns interest too. The maturity value is: A = P × (1 + r/m)^(m × t), where P is the deposit, r the annual rate, m the number of times interest is added each year and t the term in years.
Worked example
Deposit 10,000 at 7% for 5 years with quarterly compounding. It grows to 14,147.78, so you earn 4,147.78 of interest. With yearly compounding it would reach 14,025.52, and with monthly compounding 14,176.25.
The effective annual yield of 7% compounded quarterly is 7.19%: the rate you would need with yearly compounding to end up with the same amount.
Before you lock money away
Breaking a deposit early usually costs a penalty, often a lower rate on the whole amount. Keep an emergency fund elsewhere, or split your money across deposits that mature at different times (a deposit ladder).
Interest may be taxed where you live, and some banks deduct tax at source. Compare deposits on their after-tax return and against inflation.
Frequently asked questions
Which compounding frequency should I choose?
Use the one your bank states. Quarterly is common for fixed deposits in India; elsewhere yearly or monthly is common. For a daily-compounding account, monthly gives a very close result. If interest is paid out rather than added, use simple interest instead.
What is the effective annual yield?
The yield (APY or AER) turns any compounding frequency into one yearly figure, so you can compare deposits fairly.
Can I enter a term in months?
Yes, as a fraction of a year: 6 months is 0.5 and 18 months is 1.5 years. Terms are counted in whole months.
Does the result include tax?
No. It is the interest before tax. Where tax is deducted at source, the amount you receive is lower.
Methodology
Maturity value A = P × (1 + r/m)^(m × t). For the yearly table the equivalent monthly rate (1 + r/m)^(m/12) − 1 is applied each month, which gives the same result at maturity. Effective annual yield = (1 + r/m)^m − 1.
This calculator gives estimates for information only and is not financial advice. Your bank's rate, terms and taxes apply.
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