Fixed Deposit Calculator

How Fixed Deposit Interest Is Calculated

Banks typically pay FD interest compounded quarterly, which yields slightly more than a flat, non-compounded calculation over the same tenure and rate. The calculator above uses a simple-interest estimate (rate × tenure) to give you a quick, easy-to-follow figure — for a precise maturity value that accounts for quarterly compounding, check your bank's own FD calculator or maturity slip before relying on the exact rupee amount for a financial decision.

What doesn't change is the underlying logic: your return depends on the principal, the interest rate the bank offers for that tenure, and how long the money stays locked in. Senior citizens generally get a preferential rate — commonly around 0.5 percentage points higher — on top of the general rate.

Worked Example

A ₹1,00,000 deposit at 7.1% p.a. for a 12-month tenure, calculated the way the tool above does it:

Because real bank FDs usually compound quarterly, your actual payout from the same deposit is typically a little higher than this simple-interest figure — the gap widens with longer tenures and higher rates.

Tax on FD Interest and TDS

FD interest is fully taxable, added to your total income and taxed at your applicable income-tax slab rate — there's no special lower rate for interest income, unlike some capital gains. This holds under both the old and new tax regimes.

Banks deduct TDS once your total interest from that bank crosses a threshold in a financial year — commonly ₹40,000 for regular depositors and a higher ₹50,000 threshold for senior citizens. TDS being deducted doesn't mean the tax liability is settled at that rate; you still report the full interest as income and pay any shortfall (or claim a refund of excess TDS) when filing your return. If your total income is below the taxable threshold, you can avoid TDS altogether by submitting Form 15G (or Form 15H for senior citizens) to the bank.

Premature Withdrawal

Most banks allow breaking an FD before maturity but apply a penalty — commonly around 0.5–1% lower interest than the rate applicable for the period the deposit actually ran — rather than the rate you originally locked in. Some banks offer specific no-penalty or partial-withdrawal FD variants. Since penalty structures vary significantly by bank and product, check the specific terms before assuming a figure.

DICGC Insurance and How Safe Your FD Really Is

An FD is a fixed-rate deposit, not a market-linked investment — your bank owes you the principal plus the agreed interest regardless of how markets move, which is the main reason FDs remain a default choice for money you can't afford to see fall in value. That said, "fixed-rate" is not the same as "risk-free": your money is only as safe as the bank holding it. This is where DICGC (Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the RBI) steps in — deposits across all your accounts in a bank, including FDs, savings, and current accounts combined, are insured by DICGC up to ₹5 lakh per depositor per bank. That cap is per bank, not per account, so spreading ₹20 lakh across four different banks gives you fuller insured coverage than parking it all in one.

For amounts comfortably above ₹5 lakh, many depositors choose to split FDs across two or more banks rather than concentrating everything with a single institution — a simple, low-effort way to keep the insured portion of your money high without giving up the fixed-rate nature of the instrument.

Choosing Between FD Tenures

Banks typically offer a higher fixed rate for a mid-length tenure — often somewhere in the 1 to 3-year range — than for very short (under 6 months) or very long (5+ years) deposits, though the exact shape of this curve varies by bank and by the interest-rate cycle at the time. Locking into a long tenure when rates are falling can work in your favor, since you keep earning the higher rate you locked in even as new FDs being opened elsewhere offer less. The reverse is also true: locking in during a low-rate period means you're stuck at that rate even as rates rise elsewhere, unless you break the FD early and accept the withdrawal penalty.

A "laddering" approach — splitting a lump sum across FDs with staggered maturities (say, 1, 2, and 3 years) instead of one single tenure — is a common way to balance this uncertainty: some part of your money always matures soon enough to be redeployed at whatever the prevailing rate happens to be, while the rest stays locked at earlier rates.

Cumulative vs Non-Cumulative FDs

A cumulative FD reinvests the interest earned back into the deposit and pays out everything — principal plus accumulated interest — at maturity, which is what the calculator above models. A non-cumulative FD instead pays out interest at regular intervals (monthly, quarterly, or annually) as income, while the principal stays unchanged until maturity, similar in structure to how SCSS pays out. Retirees and anyone relying on the FD for regular cash flow typically prefer non-cumulative payouts, while those building a corpus for a future goal usually prefer cumulative FDs so the interest keeps compounding rather than being withdrawn along the way.

How Tenure Changes the Maturity Amount

Using the same ₹1,00,000 deposit at 7.1% p.a., here's how the simple-interest estimate the calculator uses moves as tenure changes:

Because quarterly compounding wasn't applied here (matching the calculator's own simple-interest method), a real bank FD's actual maturity value at each of these tenures would typically be a little higher than shown — the gap widens the longer the tenure runs.

FD vs Other Fixed-Income Options

An FD isn't the only fixed-rate option available for money you want protected from market swings. RDs suit building up savings through monthly instalments rather than depositing a lump sum. Post office time deposits offer a similar structure to a bank FD but are government-backed, with the rate notified quarterly rather than set by each bank independently. Debt mutual funds can sometimes offer a comparable or higher post-tax return depending on your tax bracket and holding period, but they carry market-linked NAV movements and are not insured the way bank deposits are — so the choice between them usually comes down to how much predictability you need versus how much return variability you're willing to accept for that portion of your savings.

A tax-saver FD deserves a specific mention here: it's a variant that qualifies for a deduction under the combined 80C limit (old tax regime only), in exchange for a mandatory 5-year lock-in with no premature withdrawal permitted. It's otherwise a fixed-rate deposit like the one this calculator models — the trade-off is simply a longer, non-negotiable lock-in in return for the upfront deduction, so it suits money you're confident you won't need to touch within that period. As with a regular FD, the deduction applies only under the old tax regime, and the interest earned remains fully taxable at your slab rate regardless of which regime you file under — the lock-in only affects when you can access the principal, not how the interest is taxed each year. Because premature withdrawal isn't allowed at all on a tax-saver FD, it's worth committing only an amount you're genuinely comfortable locking away for the full 5 years before opening one.