fixed deposit calculator

Fixed Deposit Calculator- The Perfect tool to Calculate the Interest on a FD

Finance

Fixed deposits have proved to be the best mode of investment for investors. A fixed deposit guarantees you safer returns and there is no involvement of risk at all. You are assured of the fact that the invested amount will be given to you along with the interest.

In case, you want to secure for your future, you can always invest your hard earned money into a fixed deposit scheme. The rate of return of a Fixed deposit is predetermined and remains the same till the time the deposit matures. After the maturity of the deposit the principal amount along with the accumulated interest is credited back in the account of the investor.

You can get the return either at the time of maturity or the time decided by you. The interest can be given to the investor quarterly or monthly or cumulatively. In case, you want to have a short term deposit, you can opt for the same too.

So have you too made your mind and wish to open a fixed deposit account? If yes, then that’s great as the investment you make can fetch good returns. But what about the interest you will be getting on your FD? I believe you will be saying, that’s quite difficult to calculate. That is no more the case. You can easily calculate the interest by using a tool called fixed deposit calculator.

Fixed Deposit Calculator is a tool which has been created to compute and calculate the maturity value of the deposit. You can calculate the interest receivable on the fixed deposit for a specified period of time by using this calculator. Within few seconds you will receive the information on your screen. The realistic result will be displayed before you when you type the FD interest rate, the deposit amount and the investment period. You will be saving a lot of time by using this tool when compared to manual calculation.

The value which will be displayed on the screen is calculated using the interest calculator formula given below-

A = P (1 + r/n) nt

I  = A – P

As a matter of fact, the interest which is paid on fixed deposits can be determined using two methods viz simple interest method and compound interest method.

Simple Interest Method – The interest is calculated on a simple interest method on the initially deposited amount for the complete deposit period. The interest which is received remains the same in the entire duration of the deposit. The returns received on the same are on the lower side.

Compound Interest Method – In case, compound interest method is used, the deposits fetch higher returns. The amount of interest which is earned in the last period is added to the initial principal. The new amount which comes is then taken into consideration to calculate the amount for the next period. This clearly means, the principal amount keeps on changing in this method throughout the duration of the deposit.

To make things crystal clear for you, I am going to compare the interest calculated on fixed deposits by using both the methods. Let’s take the help of an example to illustrate the earnings a fixed deposit will fetch on both the methods.

Suppose Abhishek Ranjit, the programming head of Colors channel, makes a deposit of ₹ 20,000 for a tenure of 10 years. The rate of interest on the same is 7.00% per annum. Now let’s calculate the interest fetched by using both the methods.

Simple Interest Method

Deposit Amount -₹ 20,000

Interest Rate – 7.00% p.a.

Tenure – 10 years

Interest Amount – ₹ 14,000

Maturity Amount – ₹ 34,000

The simple interest has been calculated by using the formula given below

A = P (1 + rt)

Where:

A = Maturity Value

P = Principal Amount

I = Interest Amount

r = Rate of Interest per year in decimal

t = Time Period involved in months or years

Compound Interest Method:

Deposit Amount – ₹ 20,000

Tenure – 10 years

Interest Rate – 7.00% p.a.

Interest Amount – ₹ 20,031

Maturity Amount – ₹ 40,031

The compound interest has been calculated by using the formula given below:

A = P (1 + r/n) nt

Where,

A = the maturity value
P = the initial deposit amount
r =  the annual interest rate
n = the number of times that interest is compounded per year
t = the number of years

From the above example, it is very clear that the interest Abhishek is earning from using a compound interest method is higher than a simple interest method. You can now easily calculate the interest earned by taking help of a fixed deposit calculator.

Fixed Deposit Calculator benefits

A fixed deposit calculator has made things easier for us when it comes to checking out the total interest receivable. Let’s make a look at the benefits of using the same.

Highly AccurateThe tool is designed to calculate the interest component and the sum of maturity at the highest levels of accuracy. You are simply required to enter the principal amount, the tenure period and rate of interest. Within few seconds you will receive information related to the maturity sum and the total interest earned.

Easy and convenient to Use– One can easily use the tool as there is nothing complicated with it. Just feed in the details and get the desired result. It is as simple as that.

Saves a lot of timeIn case you had to calculate the interest manually, you would have consumed a good amount of time. The complex formula would have given you jitters. But the tool saves a lot of time for you as even the complex calculation is done within a fraction of a second.

A Fixed deposit calculator has proved to be beneficial for those who wish to calculate the interest earned so that they can gain maximum benefits. You can now compare the interest earned on various fixed deposit schemes and take a balanced decision accordingly.

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