Fixed Deposit Calculator

Article byHarsh Katara
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Fixed Deposit Amount Calculator

The fixed Deposit amount calculator calculates the maturity amount along with the compounded interest that would have been earned either monthly, quarterly, semi-annually, or annually. Users input variables such as principal amount, tenure, and interest rate, and the calculator computes the maturity value and interest accrued over time. It simplifies the planning process for investors by providing a clear projection of returns on fixed deposits.

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A fixed deposit calculator is a financial tool designed to estimate the maturity amount and interest earned on a fixed deposit investment. It helps individuals plan and assess potential returns from fixed deposits, aiding in informed financial decision-making. Online fixed deposit calculators also provide precise calculations, enabling investors to anticipate future values and make well-informed investment choices.

Fixed Deposit Rate of Interest

P x ( 1 + r/N )nxN


Wherein,
  • P is the Principal amount that is invested initially
  • r is the fixed rate of interest
  • N is the frequency of interest being paid
  • n is the number of periods for which investment shall be made
Principal Amount
$
Fixed Rate of Interest
%
Frequency of Interest
Number of Periods

Fixed Deposit Calculator Explained

A fixed deposit calculator is a powerful financial tool that facilitates accurate and efficient planning for individuals considering fixed deposit investments. It serves as a virtual assistant for investors, providing a systematic way to compute the maturity amount and interest earned on a fixed deposit based on user-input parameters. These parameters typically include the principal amount, the tenure of the deposit, and the applicable interest rate.

The significance of a fixed deposit calculator lies in its ability to offer users a clear and detailed projection of how their investment will grow over time. By entering the relevant data into the calculator, individuals can receive instant calculations of the maturity value and interest accrued, allowing for quick comparisons and decision-making.

This tool is particularly valuable for financial planning, as it empowers investors to assess different scenarios and choose the fixed deposit option that aligns with their goals. Whether one is looking to compare the returns from varying interest rates or considering different investment periods, the fixed deposit calculator streamlines the decision-making process.

Moreover, the monthly fixed deposit calculator promotes financial literacy by simplifying the complexities of fixed deposit investments. It provides users with a tangible and comprehensible representation of the potential outcomes, allowing them to take smarter investment decisions and helping individuals optimize their financial portfolios.

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Formula

Mathematically, the online fixed deposit calculator can be expressed as:

A=P*(1+r/N)n*N

Wherein,

  • A is the total maturity amount
  • P is the Principal amount that is invested initially
  • r is the fixed rate of interest
  • N is the frequency of interest is paid
  • n is the number of periods for which investment shall be made.

How to Calculate?

One needs to follow the below steps to calculate the Fixed Deposit Maturity Amount.

  1. Determine the initial amount which is supposed to be invested, which shall be your Principal amount.

  2. Figure out the interest rate on the investment amount and the frequency of the same being paid, which shall be N.

  3. Now, determine the period for which it shall be invested.

  4. Divide the rate of interest by the appropriate value depending on the frequency. For example, if the interest rate is 5% and paid semi-annually, the interest rate would be 5%/2, which is 2.5%.

  5. Now multiply the principal amount by a compounded rate of interest.

  6. The resultant figure will be the maturity amount.

Examples

Now that we understand the basics and the related factors of a yearly or online fixed deposit calculator, let us also understand its practicality through the examples below.

You can download this Fixed Deposit Calculator Excel Template here – Fixed Deposit Calculator Excel Template

Example #1

Bank Abu is one of the biggest banks in the country, XYZ. It has existed for almost 35 years. It operates in multiple business-like commercial loans, corporate loans, overdraft facilitiesOverdraft FacilitiesOverdraft is a banking facility that offers short-term credit to the account holders by allowing them to withdraw money from their savings or current account even if their account balance is or below zero. Its authorized limit differs from customer to customer.read more, overseas funding, locker facilities, etc. it has been in existing for almost 35 years now. overseas funding, locker facilities, etc. One of the best products of the company is its fixed deposit. Customers are happy with the product as it provides the highest rate in the country. The interest rate differs for all the maturities. Below are the details for the same:

Mr. Umesh is interested in investing $100,000 for five years. The bank pays interest quarterly. Based on the given information, you must compute the compounded interest and the amount Mr. Umesh will receive at the end of the maturity period.

Solution:

We are given the below details:

  • P = $100,000
  • R = Rate of interest, which is 7.50% that is applicable for five years
  • N = Frequency which is quarterly here; hence it will be 4
  • n = number of years the investment proposed to be made, which is five years here.

Now, we can use the below formula to calculate the maturity amount.

A = P x ( 1 + r/N )nxN

Fixed deposit rate of interest example 1 (Maturity Amount)

= 100,000 x ( 1 + 7.50 / (4 x 100 ) )4 x 5

= 100,000 x ( 1.0188)20

= 144,994.80

Compounded interest will be:

Fixed deposit rate of interest example 1 (Compound Interest)

Compounded interest amount = 144,994.80 – 100,000 which shall be 44,994.80

Example #2

Mr. Seth is confused about what period he should invest in and what product he should select from the below products. He wants to invest $50,000.

Sr NoParticularsProduct IProduct IIProduct III
1Principal Amount50,000.0050,000.0050,000.00
2Rate of Interest9.60%9.50%9.45%
3Frequency in MonthsSemi-AnnuallyQuarterlyMonthly

Based on the above information, you must advise Mr. Seth on which product he should select.

Solution:

We are given the below details:

Product I

  • P = $50,000
  • R = Rate of interest, which is 9.60%, is applicable for ten years
  • N = Frequency which is semi-annually here; hence it will be 2
  • n = number of years the investment proposed to be made, which is ten years here.

Now, we can use the below formula to calculate the maturity amount.

A = P*(1+r/N)n*N

Fixed deposit rate of interest example 2 (Maturity Amount)

= 50,000 x ( 1 + 9.60 / (2 x 100 ) )2 x 10

= 100,000 x ( 1.048)20

= 127,701.40

Compounded Interest will be:

Fixed deposit rate of interest example 2 (Compound Interest).png

Compounded interest amount = 127,701.40 – 50,000 which shall be 77,701.40

Product II

  • P = $50,000
  • R = Rate of interest, which is 9.50% that is applicable for nine years
  • N =  Frequency which is Quarterly here; hence it will be 4
  • n = number of years the investment proposed to be made, which is nine years here.

Now, we can use the below formula to calculate the maturity amount.

A = P*(1+r/N)n*N

Example 2 - Product 2 (Maturity amount)

= 50,000 x ( 1 + 9.60 / (2 x 100 ) )9 x 4

= 50,000 x ( 1.0238)36

= 116,399.45

Compounded Interest will be:

Example 2 - Product 2 (Compound Interest).png

Compounded interest amount = 116,399.45 – 50,000 which shall be 66,399.45

Product III

  • P = $50,000
  • R = Rate of interest, which is 9.45% that is applicable for nine years
  • N = Frequency which is Quarterly here; hence it will be 12
  • n = number of years the investment proposed to be made, which is nine years here.

Now, we can use the below formula to compute the maturity amount.

A = P*(1+r/N)n*N

Example 2 - Product 3 (Maturity Amount)

= 50,000 x ( 1 + 9.45 / (12 x 100 ) )9 x 12

= 50,000 x ( 1.0079)108

= 116,651.59

Compounded Interest will be:

Example 2 - Product 3 (Compound Interest)

Compounded interest amount = 116,651.59 – 50,000 which shall be 66,651.59

Hence, Mr. Seth should invest in product I to maximize wealth.

Fixed Deposit Calculator Vs Recurring Deposit Calculator

Let us understand the differences between an online fixed deposit calculator and a recurring deposit calculator through the comparison below.  

Fixed Deposit Calculator

  • Calculates the maturity amount and interest earned on a lump sum investment in a fixed deposit.
  • Requires details such as principal amount, tenure, and the fixed interest rate.
  • Computes interest using a fixed rate applied to the initial investment over the specified tenure.
  • Ideal for individuals with a lump sum amount to invest for a predetermined period.
  • Offers flexibility in choosing the deposit tenure, allowing users to assess returns for different investment periods.
  • Provides a clear projection of the maturity amount and interest earned at the end of the fixed deposit tenure.

Recurring Deposit Calculator

  • Estimates the maturity amount and interest accumulated in a recurring deposit, which involves regular monthly deposits.
  • Requires details such as monthly deposit amount, tenure, and the recurring deposit interest rate.
  • Computes interest based on the monthly deposits made at a fixed interest rate throughout the deposit tenure.
  • Suited for individuals looking to make regular, systematic contributions to their deposit over time.
  • Allows users to assess the impact of varying monthly deposit amounts and investment periods.
  • Offers a projection of the maturity value and interest earned at the end of the recurring deposit tenure.

Recommended Articles

This has been a Guide to Fixed Deposit Calculator. Here we provide you with the calculator used to calculate the fixed deposit maturity amount, along with step-by-step examples. You may learn more about banking from the following articles –