What is FD Calculator & How It Works

A fixed deposit ensures that you earn fixed returns as its interest rate remains constant throughout the tenor. However, the task of calculating the returns can be tedious and time-consuming. This is because the interest calculation depends on the compounding formula. Therefore, banks and finance companies usually offer an FD calculator on their official portal. 

This online tool eliminates all the complications as it calculates the interest earnings and final maturity amount automatically. Let us first see how a FD amount calculator works:

• Firstly, you will have to enter the deposit amount and the tenor up to which you want to lock-in the deposited amount. You also need to choose whether you are interested to invest in a cumulative or non-cumulative FD as the FD interest rate varies according to the FD type as well.

• Some banks and NBFCs might ask you to choose your customer type as they offer a higher interest rate for senior citizens and their existing customers. You need to select your customer type correctly because only then you can predict your returns precisely.

• A software program is embedded at the backend of the calculator. This software applies the compounding formula once you enter all the above-mentioned details and the calculator displays the maturity amount and interest earnings accordingly. 

Benefits of using an FD calculator:

• With the help of an FD calculator, you can compare multiple FD plans, their interest rates, and final returns. You can choose one of these plans based on this comparison. 

• You do not have to pay any fee to use this calculator. Therefore, you can use it multiple times to find a plan that suits your requirements. 

• A fixed deposit calculator helps you to predict the exact returns and this can help you to plan your finances. 

The returns of a fixed deposit depend on its interest rate. Therefore, you must always choose an FD plan that offers a high-interest rate. Due to present economic conditions, the interest rates of bank FDs have fallen considerably. However, some non-bank FDs are still offering high-interest rates on their FDs. 

For example, Bajaj Finance is offering interest rates up to 7.85% for senior citizens and up to 7.60% for regular customers. Moreover, existing customers get a 0.10% extra on booking an FD and you will also get 0.10% if you renew your FD upon maturity. You can start investing with just Rs. 25,000 and you can choose a tenor up to 60 months at your convenience. 

Bajaj Finance also provides one of the most robust FD calculators in India on its official website that provides accurate returns. Also, you can invest in an SDP (Systematic Deposit Plan) if depositing a lump sum amount in a single FD bothers you. By depositing Rs. 5000 or more in an SDP every month, you can benefit from the interest rate that is prevailing at the date of deposit. 

The number of deposits in an SDP investment plan can vary from 6 to 48 depending on your financial requirements. Each of the deposits can be locked in between 12 and 60 months as per your convenience. Also, you need not visit any of its branch offices for depositing in an SDP or FD as online form is now available. Moreover, these FD plans are safe as they are credited highly for their safety and stability by credit rating organizations like ICRA and CRISIL. Therefore, you can multiply your savings without worrying about your deposited amount by investing in one of the fixed deposit investment plans.

Author Bio:

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.