FD Calculator

What is Fixed Deposit (FD)?

A Fixed Deposit (FD) is a financial instrument provided by banks and NBFCs that offers investors a higher interest rate than a regular savings account until the given maturity date. You deposit a lump sum amount for a fixed period, and the bank pays you interest at a predetermined rate. FDs are considered one of the safest investment options available.

How Does Fixed Deposit Work?

When you open an FD account, you deposit a specific amount for a predetermined period ranging from 7 days to 10 years. The bank offers a fixed interest rate based on the tenure and amount. Interest can be paid monthly, quarterly, or at maturity. The FD amount is locked until maturity, and premature withdrawal may attract penalty charges.

Benefits of Fixed Deposits

• Guaranteed Returns: Fixed interest rates ensure predictable and safe returns
• Capital Protection: Your principal amount is completely secure
• Higher Interest Rates: Better returns compared to savings accounts
• Flexible Tenure: Choose tenure from 7 days to 10 years
• Tax Benefits: Tax-saving FDs offer deduction under Section 80C
• Loan Facility: Avail loans against your FD deposits
• Simplified Process: Easy to open and manage FD accounts

Types of Fixed Deposits

FD Interest Calculation Methods

Factors Affecting FD Interest Rates

• RBI Policy Rates: Changes in repo rate affect FD rates
• Tenure Period: Longer tenure usually offers higher rates
• Deposit Amount: Higher amounts may get better rates
• Investor Category: Senior citizens get 0.25-0.5% extra
• Bank Type: Different banks offer varying rates
• Economic Conditions: Inflation and market conditions impact rates

FD vs Other Investment Options

Taxation on FD Interest

• TDS Deduction: 10% TDS if interest exceeds ₹40,000 (₹50,000 for senior citizens)
• Taxable Income: FD interest is fully taxable as "Income from Other Sources"
• Tax Slab: Taxed according to your income tax slab
• Form 15G/15H: Submit to avoid TDS if total income is below taxable limit
• Advance Tax: Pay advance tax on expected FD interest income

Who Should Invest in FD?

• Conservative Investors: Those who prioritize capital safety over high returns
• Senior Citizens: Looking for stable income and higher interest rates
• Emergency Fund: Keeping emergency savings with better returns than savings accounts
• Short-term Goals: Saving for goals 1-3 years away
• Risk-Averse Individuals: Those uncomfortable with market volatility

Tips for Maximizing FD Returns

• Compare Rates: Research FD rates across multiple banks and NBFCs
• Laddering Strategy: Create multiple FDs with different maturity dates
• Senior Citizen Benefits: Senior citizens get preferential rates
• Choose Right Tenure: Optimize tenure based on interest rate patterns
• Reinvest Matured Amounts: Reinvest matured FDs to continue earning interest
• Nomination Facility: Add nominees for smooth fund transfer

FD Premature Withdrawal Rules

• Penalty Charges: Banks charge 0.5-1% penalty on premature withdrawal
• Interest Recalculation: Interest recalculated at the rate applicable for actual tenure
• Partial Withdrawal: Some banks allow partial withdrawal without closing entire FD
• Loan Against FD: Consider loan against FD instead of premature withdrawal
• Emergency Planning: Plan FD laddering to avoid premature withdrawals