Fixed Deposit Calculator

A fixed deposit is a term contract with a bank: you surrender access to a lump sum for an agreed tenure and the bank fixes the interest rate for that whole period. That rate lock is the entire point. Unlike a savings account, whose rate the bank can revise at any time, an FD booked today keeps its rate to maturity even if the Reserve Bank of India cuts the repo rate the following month. The corollary is that you also keep the rate if rates rise, which is the risk laddering is designed to manage. Most Indian banks compound FD interest quarterly, and this is where the advertised rate and the return you actually receive diverge. A deposit quoted at 7 percent with quarterly compounding yields (1 + 0.07/4)^4 - 1, or 7.19 percent a year, because each quarter's interest starts earning interest itself. Annual compounding on the same headline rate returns exactly 7 percent. When comparing offers, convert every quote to an effective annual yield first; a bank advertising a marginally lower nominal rate with monthly compounding can beat one advertising more with annual compounding. Two further factors decide the real outcome. Interest is taxable as income from other sources at your slab rate in the year it accrues, not merely when the deposit matures, so a headline 7.19 percent becomes roughly 5 percent after tax in the 30 percent bracket. And deposits at each bank are guaranteed by the Deposit Insurance and Credit Guarantee Corporation up to ₹5 lakh per depositor per bank, covering principal and interest combined, which is why large sums are often spread across banks rather than concentrated for a marginally better rate.