**What is a Fixed Deposit Calculator?**

It is very important to know your return on investment. Fingyan’s Fixed Deposit Calculator takes into account the deposit amount, deposit tenure, interest rate and the interest compound frequency and calculates the fixed deposit maturity value and the fixed deposit interest rate value. It is wise to use the Fixed Deposit Calculator because it helps you derive at the value for your investment before you make the investment decision and so that you can efficiently manage your finances.

**How to Use a Fixed Deposit Calculator?**

Even though fixed deposits do not offer high returns, they are safe and stable investments that guard your principal amount. In case you wish to invest in a fixed deposit, but you are unsure of the interest calculation and confused about the amount you shall receive on maturity, you can use Fingyan’s Fixed Deposit Calculator to calculate the exact amount you stand to receive from your investment in a fixed deposit. Using Fingyan’s Fixed Deposit Calculator is a fairly easy process. When you are on Fingyan’s homepage, you need to click on the Banking category from the main menu and select Fixed Deposit from the drop-down menu. This will lead you to the Fixed Deposit Calculator page. On the Fixed Deposit Calculator, you need to input three simple details. First, you need to input the amount you wish to deposit. Second, you need to fill the rate of interest and third you have to fill the tenure of the fixed deposit in days. For example, if you wish to invest in a fixed deposit for a tenure of 1 year, then you need to fill in 365 days. After you fill all the details, click on the calculate button. In a matter of a just a few seconds, the Fixed Deposit Calculator will calculate and display two values. It displays the fixed deposit maturity deposit amount and the fixed deposit interest amount. This will help you take the decision of whether or not to make an investment.

**How Fixed Deposit Maturity Amount is derived?**

The formula that is universally used to calculate the Fixed Deposit Maturity Amount is as follows:

In this formula,

**A=** The Final Fixed Deposit Maturity Amount that will be received.

**P=** The Principal Amount or the Initial Investment Amount.

**r=** The Annual Nominal Rate of Interest (as a decimal, e.g., if the interest paid per annum is 6.5% then r= 0.065)(This figure should not be in decimal)

**n=** The total number of times the interest is compounded in a year. (If it is compounded monthly then n=12, if it is compounded quarterly then n=4, if it is compounded semi-annually then n= 2)

**t=** The number of years.

For example: Say you want to invest an amount of 1500 in a fixed deposit for 6 years with an interest rate of 4.3% per annum compounded quarterly then the following is your calculation.

Here P=1500, t=6, n=0.043, and r= 4.3/100

Thus A= Rs. 1938.84

**What are the Advantages of Making an Investment in a Fixed Deposit?**

**Guaranteed Returns: **A fixed Deposit is a safe investment and yields guaranteed returns.

**Early Withdrawal:** The money that your investment in a fixed deposit can be withdrawn even before the maturity date by paying just a nominal penalty charge. Should you need it, you can withdraw your money because it does not get blocked and it is hassle-free to do so.

**Higher returns than a savings account: **Investment in a fixed deposit yields a higher return in comparison to a savings account. Most savings accounts don’t give you a return more than a 6%, however, for a fixed deposit, the rate starts from 7%. Hence it's better to invest your money in a fixed deposit instead of keeping it idle in a savings account.

**The flexibility**** of interest payment:** The interest that you earn on an investment in a fixed deposit can be withdrawn on maturity, monthly, annually. However, this depends on the term you select.

**The flexibility**** of tenure:** You can invest your money in a fixed deposit and enjoy the flexibility of deciding the tenure of your investment at your discretion. You can invest your hard earned money for a tenure ranging from 1 week to 10 years and more.

**Saving habit: **Investing in a fixed deposit for a fixed time frame will inculcate the habit of saving in you.

**Avail a loan against fixed deposit**: In an emergency situation, you can avail a loan against your fixed deposit up to 90% of the principal amount of your investment. Even if you take a loan against your investment in a fixed deposit, you will still keep earning interest on your fixed deposit. You can use the interest that you earn to repay your loan conveniently.

**Higher interest rates for senior citizens:** One of the most significant reasons for the popularity of fixed deposits among senior citizens is that a fixed deposit pays higher interest rates for senior citizens. The rate of interest is at least 0.50% higher in comparison to what is received by other customers.

**Joint**** fixed deposits: **A number of people are unaware of this fixed deposit feature. You can have a joint fixed deposits with your spouse, parents, and or children. If you withdraw a joint fixed deposit prematurely then all fixed deposit holders have to sign the application form.

**Tax deductions:** If you invest in a fixed deposit for a period of 5 years or more than your fixed deposit qualifies for a tax deduction under section 80C of the Income Tax Act, 1961.

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**Factors That Effect Fixed Deposit Interest Rate**

We all know that the fixed deposit interest rate remains the same throughout the fixed deposit tenure; the interest rate may or may not change at the date of maturity. Hence if you want to reinvest or renew the fixed deposit, then that is always done depending on the interest rate at maturity. As per the bank norms, the fixed deposit interest rate may vary. When you are considering reinvestment, it is wise to compare various fixed deposit schemes and select the one that offers a higher rate of interest. Some of the significant factors that impact the fixed deposit interest rates are as follows:

**Reserve Bank of India (RBI):** The Reserve Bank of India is India’s Central Bank. It holds the significant authority to manage the country’s monetary policy. In order to ensure appropriate flow of funds in the country and to attain maximum credit control, the Reserve Bank of India may implement certain regulations on the banks of the nation. Such regulations impact the increase or decrease of the interest rates of all financial products such as a fixed deposit.

**Inflation:** The price rise that leads to a reduction in purchasing power over the lent amount, and results in rupee devaluation. Hence the banks offer a higher rate of interests on term deposits to attract more cash. This is how the banks make up for the loss of interest on the loans offered to the public in case of an inflation situation.

**Recession:** Recession is in simple terms a period of economic slowdown. During a recession period, the Reserve Bank of India increases the money supply in the economy by decreasing the rate of interest on deposits in the banks and cash stocks. This results in the decrease in the fixed deposit interest rates.

**Benefits of Using a Fixed Deposit Calculator**

Some of the significant benefits of using Fingyan’s Fixed Deposit Calculator are as follows:

**Accuracy:** The calculation of fixed deposit maturity amount and the fixed deposit interest amount is complex and cumbersome. There are also chances of manual error. The Fixed Deposit Calculator is a tool devised to accurately derive the desired values with a negligible possibility of error.

**Time Saving Tool: **The manual calculation of fixed deposit maturity amount and the fixed deposit interest amount is time-consuming. A Fixed Deposit Calculator takes just a split second to display the calculations once you fill in three simple details. A Fixed Deposit Calculator saves time and effort on your end and provides you with accurate results.

**Financial Planning: **A Fixed Deposit Calculator helps you in financial planning. You can compare different fixed deposit schemes to make a wise investment decision and know exactly what amount of money you stand to receive on maturity and what you want to do with that amount of money beforehand.

**Comparison of multiple fixed deposit schemes:** You can use a Fixed Deposit Calculator to compare between umpteen number of fixed deposit options and based on the results you can select the one that pays the highest interest and invest an amount of money that you are comfortable investing for a tenure that you are willing to part your money for.

**Why TDS?**

All individuals are legally bound to pay taxes/ or get the tax deducted at source when the payments are received. This tax deducted at source is called TDS. The TDS is payable to the government. At the end of the financial year, the banks deduct TDS. The investor will receive the net amount. The payee will have to add the gross amount to his/her total income and then adjust the TDS to derive to his/her final tax liability. Most banks deduct a TDS applicable if the interest amount exceeds a sum of Rs 10,000(this amount represents the total amount of interest earned from all fixed deposits of a single payee) the rate of TDS levied by the government of India is 10%, 20%, or 30% depending upon which tax slab the payee falls under.

**Fixed Deposit Vs. Recurring Deposit**

Both Recurring Deposit and Fixed Deposit are term deposits. However, between a fixed deposit and a recurring deposit of exactly the same amount, the rate of interest, and tenure, a fixed deposit earns higher returns. The reason behind this is that a fixed deposit involves a one time investment of a lump sum amount, and thus the investor earns interest on this full amount for an entire year, however, in case of a recurring deposit the first instalment earns an interest on 12 months, the instalment earns on 11 months, the third instalment earns an interest on 10 months and so on.