The very time you decide to switch to investment from saving, you start your research for the best investment options. From all other investments, the Fixed Deposit (FD) is considered to be one of the most reliable and beneficial modes of investment in India. FD is a type of term deposit wherein you receive the deposited principal amount along with an interest rate that is compounded daily, monthly, quarterly, or yearly.
FDs have a flexible tenor and fixed/floating rate of interest. The interest rate applied to an FD is higher than that of a savings account. Both banks and Non-Banking Financial Companies provide this facility. The interest rate depends on the tenor of the FD, the amount deposited, and the financial provider. Also, if you choose a floating interest rate, your interest rate can fluctuate with the market rate fluctuations.
Due to the difference in interest rates, you need to calculate your returns based on the sum deposited, tenor selected, and the interest rate applied by your financial provider. With an online FD calculator, you can calculate the FD returns quickly.
How to Use a Fixed Deposit Calculator?
Unlike the manual calculation procedure, using an online FD calculator is an effortless process. Following are a few steps that you must follow to calculate FD returns:
Step 1
Select the customer category you belong to from new customer, existing customer, or a senior citizen. This step is important because the interest rate applied to each category is different. One of the notable financial providers in India, NBFCs, offers attractive interest rates for all three categories. For new customers, the interest rate ranges from 7.72% to 8.75%, for existing customers, it is 7.97% to 9.0%, and for senior citizens, it is 8.07% to 9.10%.
Step 2
Choose the type of fixed deposit you wish to invest in. There are two types of fixed deposits – cumulative FD and non-cumulative FD. In a cumulative FD, the interest is paid altogether at the time of maturity. In a non-cumulative FD, the interest amount is paid on a monthly, quarterly, semiannual, or annual basis. Experts suggest opting for a cumulative FD to gain additional benefits like higher interest rates.
Step 3
Select the amount you wish to deposit in the fixed deposit account. The minimum deposit for opening an FD with NBFCs is as low as Rs. 25000. No upper limit to set to the amount you can deposit in a fixed deposit account. The results from the fixed deposit interest calculator are based on the amount you choose to deposit in the FD account.
Step 4
Select the tenor of your FD based on your financial goal. The tenor of an FD can range from 7 days to 10 years with conventional banks. You can choose a tenor from 12 months to 60 months with a fixed deposit account. The longer the tenor of your FD, the higher will be the interest rate applied on your principal deposit.
The total interest rate and the returns will be displayed on your screen as soon as you complete the steps mentioned above. You must opt for a tenor as per your financial goal from the amount received. Since you can open multiple FDs at the same time, you can distribute your total sum into multiple FDs with varying tenors. This process is termed as laddering of FD.
If you have got a considerable sum for the deposit, you can ladder your investment. This can assure you liquidity and help you avoid premature withdrawals. You can easily access the FD interest rates calculator from the website of your chosen finance provider.
