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How Does an FD Calculator Work?
Posted on Tuesday, November 15th, 2022 | By IndusInd Bank
The FD calculator is an online tool that uses a simple formula to give you an instant estimate of your FD maturity amount. The IndusInd Bank FDcalculator helps investors make an informed decision before they invest funds in an FD.
One of the most basic financial instruments offered by banks, a fixed deposit (FD) lets you invest your money for a fixed period, allowing you to earn returns at a predetermined rate of interest. Widely regarded as one of the most reliable savings plans, an FD comes with the promise of assured returns. Interest rates for FD accounts vary from bank to bank. Tenures are flexible, typically ranging from 7 days to 10 years. A fixed deposit calculator helps an investor determine the interest and amount that will accrue at the time of maturity.
How an FD Calculator Works
The FD Calculator is an easy-to-use online tool that simplifies the time-consuming and complex process of calculating the fixed deposit maturity amount. The interest on FDs can be calculated by two methods, namely simple interest and compound interest. While simple interest refers to the interest earned on the principal amount invested, compound interest is the interest earned on the principal amount as well as the interest. It must be noted that the greater the principal amount and longer the tenure, the higher would be the interest earned due to the power of compounding.
The following formulae are used by the FD calculator for simple interest and compound interest FDs:
| Simple Interest Formula | Compound Interest Formula |
| **P + (P * r * t/100) = M | ***P (1+r/n) ^ (n * t) = A |
**Where M is the maturity amount, P is the principal amount deposited, r is the rate of interest per annum, and t is the tenure in years.
For example, if Rs. 10,000 is deposited for 3 years at 10% interest per annum:
10,000*10*3/100 = Rs 13,000 (maturity amount).
***Where A is the maturity amount, P is the principal amount invested; r is the rate of interest, n is the compounded interest frequency, and t is the tenure.
To illustrate, if a principal sum of Rs. 1, 00,000 is invested for 10 years at an interest rate of 5% per annum compounded quarterly:
1, 00,000 (1+0.05/4) ^ (4*10) = Rs. 1, 64,361 (maturity amount).
Why an FD Calculator is Helpful
If you are planning to open an FD account, a fixed deposit calculator helps you in the following ways:
- It is an automatic calculator that ensures 100% accuracy, with no scope for errors.
- Convenient and easy to use, it saves you the hassle of getting into tedious and manual calculations.
- This is a free tool that can be deployed multiple times for figuring out the best returns over the desired tenure, using different combinations of principal amounts, FD interest rates, and tenures.
IndusInd Bank FD Calculator
You can get an instant estimate of your FD returns using the IndusInd Bank FD interest calculator. All you have to do is enter the chosen tenure and investment amount, and the maturity amount will be instantly displayed.
This FD interest calculator is designed to help investors make an informed decision, giving them foreknowledge of the interest they would earn based on their principal amount, desired tenure, and prevailing rate of interest.
The interest rates applicable on IndusInd Bank Fixed Deposit accounts for senior citizens are slightly higher than the normal rate of interest.
It must be noted that the compounding period, or the pay-out tenure of the fixed deposit, may be monthly, quarterly, half-yearly, or yearly. The compounding period determines the interest earned on the FD and must be mentioned appropriately.
If you have idle funds, it is better to park them in a fixed deposit account than a savings account. Make use of the IndusInd Bank FD interest calculator, and find out your returns today!
