Fixed deposits have long been considered a very popular investment method when saving your money. Your money is safe with a fixed deposit account, and you earn interest. Some fixed deposits offer very good interest rates though some terms and conditions are associated. A fixed deposit can be locked for 7 to 10 years and can be extended depending on the customer. A fixed deposit calculator is a useful tool to calculate how much interest you will receive at maturity. This tool is user-friendly, and anyone can use it. It allows you to compare the prevalent interest rates of different financial organisations and help you decide. You can choose the best maturity interest rate with the help of an interest rate calculator for FD.
Why take the help of an FD calculator?
The whole process involved in calculating the maturity amount of an FD is complicated and takes a lot of time. The calculator will help you know how much you will receive upon your account maturity without making any effort.
Multiple variations are used in calculations to arrive at the best interest rate. A calculator performs difficult calculations and provides you with exact figures. It ensures accuracy in terms of calculations. Otherwise, doing it manually will involve human error, and you cannot rely on manual calculations. With just a single click of a button, you will know the amount you will get at maturity. Thus you can be fully informed before you choose the best fixed deposit plan.
The process involved in the calculation of fixed deposit interest rate
The interest rate is usually calculated when opening a fixed deposit account. An FD interest rate calculator calculates interest based on simple and compound interest. Simple interest is a pre-decided interest rate for the entire duration of your fixed deposit. It is decided by multiplying the yearly interest rate, the principal amount, and the duration. ( PXRXT/100).
Compound interest is the interest you earn on your principal and interest amounts. For this, you need to multiply the interest rate by the principal amount and the duration of the period when the interest is accumulated or compounded.
You need to fill in the details as requested by the calculator to know the interest rate.
- You will provide details of the customer type, whether you are a senior citizen or general.
- Then you need to choose the investment amount and maturity period at your convenience.
Once you provide all these details, the calculator will immediately display the maturity amount and interest rate.
Factors Affecting Fixed Deposit Interest Rates
Various factors affect the interest rate of fixed deposits, and you should know them in advance:
FD Tenure
It refers to the period the fixed deposit amount will stay invested. It varies from organisation to organisation. It could be anywhere between 5 to 10 years. This duration will also affect the interest rate on your fixed deposit account.
Applicant’s age
Some fixed deposit interest rates are specially designed for senior citizens. Various financial organisations offer these fixed deposit plans for the benefit of senior citizens. It could be between 0.25% to 0.75% which is applied to the regular interest rate. Therefore, you will enjoy a higher interest rate if you fall under the senior citizen category.
Invested amount
The amount you invest on your fixed deposit also determines the interest rate of the fixed deposit. The higher the amount, the higher the rate of interest.
Auto-renewal
If you opt for the auto-renewal facility, you can enjoy a higher interest rate. It would minimise the need to keep a check on your renewal date. These are renewal benefits, and various fixed deposit account providers offer this facility. In addition, you can easily calculate your maturity amount after each renewal with the help of a fixed deposit online calculator.
Current economic condition
The economic condition prevailing in a country and the respective governments’ monetary and fiscal policies also impact the country’s fixed deposit rates.
Conclusion
As you have, the interest rate calculator for FD helps you at every stage of your fixed deposit account, from starting to the maturity period and subsequent renewals. You can search online for a financial organisation with the best-fixed deposit plan.
