Fixed Deposit Calculator
Calculate maturity value, compound interest earned, and effective annual yield (APY) on bank fixed deposits and CDs.
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What Is a Fixed Deposit Calculator?
A Fixed Deposit (FD) or Certificate of Deposit (CD) is a low-risk financial instrument offered by commercial banks and credit unions where you deposit a lump sum for a fixed tenure at a predetermined guaranteed interest rate. Interest compounds periodically (monthly, quarterly, semi-annually, or annually) until maturity.
How to Use This Calculator
- Enter your lump sum deposit amount (Principal).
- Enter the annual nominal interest rate offered by your bank.
- Specify the tenure duration in years or fractions of years.
- Choose your bank compounding frequency (quarterly is standard for most commercial banks).
- Review your total maturity value, accrued interest, and effective annual yield.
Compound Interest Maturity Formula
A = P \left(1 + \frac{r}{n}\right)^{n \times t} \quad ; \quad I = A - PWhere A is the final maturity amount, P is the initial principal, r is the annual nominal interest rate (decimal), n is compounding events per year (e.g. 4 for quarterly), and t is time in years.
Worked Example
Scenario: Depositing $10,000 for 5 years at 7.00% annual interest compounded quarterly.
Principal P = $10,000, r = 0.07, n = 4, t = 5 years (20 quarters).
Periodic Rate: 0.07 / 4 = 0.0175 per quarter.
Maturity: $10,000 × (1.0175)^20 = $10,000 × 1.414778 = $14,147.78.
Total Interest Earned: $14,147.78 - $10,000.00 = $4,147.78.
Tips & Key Notes
- Senior citizens frequently qualify for preferential fixed deposit interest rates (typically 0.25% to 0.50% higher).
- Consider a "CD ladder" strategy with staggered maturity dates to maintain liquidity while earning higher term deposit yields.
- Check whether your bank imposes early withdrawal penalty charges if you break the fixed deposit before maturity.
Frequently Asked Questions
Why is quarterly compounding more profitable than annual compounding?
With quarterly compounding, interest is calculated and added to the principal 4 times every year. Future quarters earn interest on previous interest, increasing the effective annual percentage yield (APY).
Are fixed deposit earnings subject to taxation?
Yes. In most jurisdictions (such as the US, UK, and India), interest earned on fixed deposits and CDs is treated as taxable ordinary income and must be reported on annual tax filings.
What is the difference between cumulative and non-cumulative FDs?
In a cumulative FD, interest accumulates and reinvests until final maturity for maximum compounding growth. In a non-cumulative FD, interest is paid out periodically (monthly or quarterly) directly to your checking account as cash flow.
Are fixed deposits insured against bank default?
In the US, deposits are insured up to $250,000 per depositor per bank by the FDIC. In India, DICGC insures deposits up to ₹5 lakh per depositor across commercial banks.
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