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# Complete Guide on How to Calculate FD Interest

Personal Finance How To? 23-11-2022 | 5 mins read

A fixed deposit is an investment option that is risk-free, simple, and needs only a single initial payment. You can leave a sum of money known at the bank for a fixed time. During this time, interest will be accrued on the deposit. After it all, your initial deposit will be returned to you, along with interest. Do you have questions about how much interest you’ll be getting on your fixed deposit? You will be able to learn how to compute FD interest using an FD interest calculator by reading this article.

Understanding how interest on FDs is calculated might help you make the most of your investment. Even though many people find calculations very difficult, we are here to make things as easy as possible.

## How is FD Interest Calculated?

Fixed deposit interest calculators use two separate formulas to compute interest on FDs. Why two? This is due to two fixed deposit accounts: simple interest and compound interest.

The formulas used to compute the fixed deposit manually are presented below.

1. Simple Interest Formula

SI = PRT/100

In the formula, ‘SI’ stands for Simple Interest. ‘P’ stands for the principal amount, which is the amount of money that you put into the FD. ‘R’ refers to the rate of interest that is accrued on the principal. And ‘T’ refers to the length of time that the principal is locked in.

Let us consider one example:

Calculate the amount of simple interest that a person can receive on Rs. 8,200 over a 2-year, 6-month period at a rate of 17.5% p.a.

S.I. = (8200 x2.5x 17.5)/100 = Rs. 3587.50

1. Compound Interest Formula

CI = A – P

In the equation you just looked at, the letters ‘CI’ stand for compound interest. The value denoted by ‘P’ is the principal amount. And ‘A’ is the amount that will have been accrued when the loan is paid off. The value of ‘A’ can be derived by using the formula that is given below:

A=P (1+r/n) ^ (n*t)

In this formula, ‘A’ is the maturity amount. ‘P’ is the Principal amount,’r’ is the rate of interest, ‘t’ is the time, and ‘n’ is the compound interest frequency.

## What is an FD Calculator?

The maturity amount that the investor should get after the tenure of the FD at the applicable interest rate can be obtained using a fixed deposit calculator. Before investing money in an FD, you can calculate the interest income using an FD calculator.

## Why Use an Online FD Interest Calculator?

To know about the interest you will get when your fixed deposit matures, you can now easily use an online fixed deposit interest calculator.

●        The calculations always give accurate results:

Because it is an entirely automated process, there is no room for human error, making the results accurate.

●        Helps you to know the risks:

If you calculate the interest you will get on the maturity of the FD, you will have an idea of what returns you may get on your fixed money. This will also help you to know more about the risks so that you can choose whether the risk with the FD is worth the potential return.

●        You will save both time and effort:

If you use an online FD interest calculator rather than making the calculations yourself, it goes without saying that this option is considerably simpler and more efficient. In addition to the fact that the results will be displayed in a couple of minutes, the amount of effort necessary for it is also very low.

## How Does an FD Calculator Work?

Below are the steps to use the fixed deposit calculator:

Step 1:  Collect all the information about the fixed deposit, such as the principal amount to be invested, the tenure you want to fix your money, and the interest rate that the bank provides.

Step 2: Launch the FD calculator and insert the variables into the boxes on the interface.

Step 3: The FD interest calculator will quickly show you how much money you will get back when your fixed deposit account matures.

## Benefits of using the FD Calculator

●        An easy and smart approach to budgeting

●        It allows you a repeated use to compare the results of investments

●        You have to pay no fee for using the FD calculator.

●        It also gives you a schedule for the payment of interest on a very consistent basis.

## Conclusion

Returns on a fixed deposit are certain. The interest rate offered by the bank when you open an FD will not change till the maturity of your FD. It does not matter whether the interest rates rise or fall; your FD will remain unaffected. Using an FD calculator, you may see the returns you will get after a given amount of time. With the help of Piramal Finance’s user-friendly FD interest calculator, you can quickly choose whether or not a fixed deposit will result in a profit for you in the long run. If you need help with finances, you can always take the help of experts such as Piramal Finance to guide you through your personal finance woes.

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