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Monday, February 26, 2024

Fixed Deposit Interest Calculator l A Guide to Use it

A sizeable savings fund is the secret to a healthy financial life. However, when it comes to creating a sizeable savings fund, investing in a savings fund is the most efficient approach. One such savings fund is a fixed deposit. It is the go-to savings scheme for individuals looking for a safe way to grow their money without being exposed to market risks.

So, if you belong to the category of individuals who want to invest in a fixed deposit, it’s highly recommended you use a fixed deposit interest calculator.                          

We will tell you more about it, but let’s brush up on the basics of the investment option we are discussing.

Features And Benefits Of Fixed Deposit      

Now that you know all about a fixed deposit interest calculator, let’s take a look at the features and benefits of a fixed deposit account that make it an attractive savings cum investment avenue:

  • Guaranteed Returns:

A fixed deposit account is the go-to investment choice for individuals looking for the highest level of investment security. As fixed deposits are backed by the government and RBI, they are a safe investment option. In addition, they provide guaranteed returns according to the FD interest rate. As there is no investment in market-linked instruments, there is no scope for speculation. You get what you were promised. You can use an FD monthly interest calculator to know the maturity amount you will accumulate.

  • Flexible Tenures:

The tenure for a fixed deposit account varies from bank to bank but ranges between 7 days to 10 years. You can decide the tenure as per your savings cum investment goals and your financial preferences and objectives. If you are aiming to earn high returns, go for the maximum tenure. Feel free to use an FD monthly interest calculator to help you decide the investment tenure.

  • The facility of Availing Loans:

To make the process of availing loans easier than ever, banks offer a facility wherein you can mortgage your fixed deposit account to secure loans from banks. The amount of loan that can be secured varies from bank to bank.

  • Tax Benefits:

As per the Income Tax Act, the interest income earned on fixed deposits is free of tax.

Now that we know the features and benefits of a fixed deposit account, let us discuss a fixed deposit interest calculator.

What is a Fixed deposit Interest Calculator?           

A fixed deposit interest calculator is an online tool that helps you have an estimate of the amount you will be accumulating on maturity. Even though a fixed deposit account invites a one-time lump-sum deposit, it accumulates a fixed interest every year. This added interest on the principal amount further invites interest in the following year, known as compound interest. A Fixed deposit interest calculator calculates this amount by using the compound interest formula.

How Does a Fixed Deposit Interest Calculator Work?        

A fixed deposit interest calculator online provides the results using the compound interest formula as provided above. It takes into account the invested amount, rate of interest and investment tenure. All you have to do is enter these details, and the fixed deposit interest calculator will calculate the maturity amount for you.

Why Use FD Interest Calculator?     

A Fixed deposit interest calculator can be used for efficient financial planning. As a Fixed deposit interest calculator estimates the maturity amount of the fixed deposit account, it can help you take crucial financial decisions. This can include the amount you additionally need to create your ideal savings fund or other investment options you need to choose that can help fasten wealth generation. You can also calculate the maturity amount through the compound interest formula. However, the calculation can be a bit complex and subject to errors. In this instance, using a fixed deposit interest calculator is recommended for utmost convenience.

Why Use FD Interest Calculator

How to Use a Fixed Deposit Interest Calculator?

The first step is to find the fixed deposit interest calculator of your choice. There are tons of tools available online.

Once the selection is made, enter the following information:

  • Investment Tenure:

The investment tenure is one of the most important factors that affect the maturity amount estimated by the FD maturity calculator. It is suggested that you stay invested for a longer duration if you want to earn high returns. The longer the investment tenure, the higher would be the returns. So, decide the investment tenure accordingly.

  • Interest Rate: As a Fixed deposit interest calculator computes the maturity amount on the compound interest formula, the interest rate offered by FD is crucial. It affects the amount you will be getting at maturity. Enter your pre-determined FD interest rate in this area.
  • Investment Amount:

The maturity amount varies with the investment amount. It is a given that the higher the investment amount would be, the higher would be sum payable at maturity. So, when you are using an FD rate calculator, ensure that the investment amount you are entering aligns with your investment capability.

  • Hit Calculate:

You are done! You will now see the maturity amount on your screen.

The Bottom Line

A fixed deposit interest calculator can be used to formulate your savings strategy! So, what are you waiting for? It’s free to use and results in a matter of minutes!

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