What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a savings instrument offered by banks and NBFCs (Non-Banking Financial Companies) where you deposit a lump sum for a fixed tenure at a predetermined interest rate. Unlike a savings account where the rate fluctuates, an FD locks in your rate for the entire tenure — giving you predictable, guaranteed returns regardless of market conditions.
FD tenures in India range from 7 days to 10 years. Interest rates are typically higher for longer tenures and for senior citizens (who usually get an additional 0.25–0.5% above standard rates). Small finance banks and some co-operative banks offer higher rates than large commercial banks, though these carry slightly more risk.
Because of their capital safety, guaranteed returns, and DICGC insurance up to ₹5 lakh per depositor per bank, Fixed Deposits remain one of the most popular investment instruments in India — especially for risk-averse investors, senior citizens, and those with short to medium-term financial goals.
How to use this FD calculator
- Principal Amount: Enter the amount you want to deposit. This is the lump-sum you will invest in the FD.
- Annual Interest Rate: Enter the rate offered by your bank. Compare rates across banks before finalising — even a 0.5% difference can significantly impact maturity on larger deposits.
- Tenure: Enter the investment period in years or months. Short-tenure FDs (under 1 year) are useful for parking emergency funds; longer tenures earn more through compounding.
- Compounding Frequency: Choose how often interest is compounded — monthly, quarterly, half-yearly, or annually. More frequent compounding yields a slightly higher maturity value.
- The calculator instantly shows your Interest Earned and final Maturity Amount.
FD Maturity Formula
Fixed Deposit maturity is calculated using the compound interest formula:
- A — Maturity amount (principal + interest)
- P — Principal (initial deposit amount)
- r — Annual interest rate as a decimal (e.g., 7% = 0.07)
- n — Number of times interest is compounded per year (monthly = 12, quarterly = 4, half-yearly = 2, annually = 1)
- t — Tenure in years
Example: Invest ₹1,00,000 at 7.5% p.a. for 3 years, compounded quarterly (n = 4). The monthly rate is 7.5/4 = 1.875% per quarter. A = 1,00,000 × (1 + 0.075/4)^(4×3) = 1,00,000 × (1.01875)^12 ≈ ₹1,25,094. Interest earned = ₹25,094.
FD Maturity Examples — Common Deposit Amounts
The table below shows indicative maturity values at 7.5% p.a. with quarterly compounding:
| Principal | Rate (7.5% p.a.) | Tenure | Interest Earned | Maturity Amount |
|---|---|---|---|---|
| ₹50,000 | 7.5% | 1 year | ₹3,852 | ₹53,852 |
| ₹1,00,000 | 7.5% | 2 years | ₹16,100 | ₹1,16,100 |
| ₹1,00,000 | 7.5% | 3 years | ₹25,094 | ₹1,25,094 |
| ₹2,00,000 | 7.5% | 5 years | ₹93,070 | ₹2,93,070 |
| ₹5,00,000 | 7.5% | 5 years | ₹2,32,675 | ₹7,32,675 |
| ₹10,00,000 | 7.5% | 10 years | ₹11,13,176 | ₹21,13,176 |
Values are indicative at 7.5% p.a. with quarterly compounding. Actual maturity depends on your bank's rate and compounding terms.
Cumulative vs Non-Cumulative FD — Which Should You Choose?
The choice between a cumulative and non-cumulative FD depends on whether you need regular income or prefer to maximise your final corpus:
Cumulative FD
Interest is compounded and reinvested throughout the tenure. The entire amount — principal plus accumulated interest — is paid at maturity. Best for investors who do not need regular income and want to maximise wealth accumulation. Tax-saving FDs (5-year lock-in under Section 80C) are always cumulative.
Non-Cumulative FD
Interest is paid out at regular intervals — monthly, quarterly, half-yearly, or annually. The payout goes directly to your linked bank account. Ideal for retirees or anyone who needs a steady, predictable income from their savings. The total interest earned over the tenure is slightly less than a cumulative FD due to no reinvestment benefit.
Benefits of Investing in a Fixed Deposit
Guaranteed Returns
Unlike mutual funds or stocks, an FD guarantees your interest rate for the entire tenure. Your returns are unaffected by market volatility — the rate locked in at booking is what you earn.
Capital Safety
Principal and interest are insured up to ₹5 lakh per depositor per bank under DICGC. For large amounts, consider spreading deposits across multiple banks to maximise coverage.
Flexible Tenure
FD tenures range from 7 days to 10 years. This flexibility lets you align maturities with specific financial goals — a vacation in 6 months, a down payment in 2 years, or retirement in 10 years.
Loan Against FD
You can take a loan of up to 90% of your FD value at a rate just 1–2% above your FD rate — far cheaper than a personal loan. This lets you meet emergencies without losing your FD interest.
Tax on Fixed Deposit Interest
FD interest is taxable as "Income from Other Sources" and is added to your total income for the year. The tax is levied at your applicable income tax slab rate — not a flat rate. Banks deduct TDS at 10% when the interest earned across all FDs in that bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If your PAN is not updated with the bank, TDS is deducted at 20%.
If your total income is below the basic exemption limit (₹2.5 lakh for individuals below 60), submit Form 15G to your bank to prevent TDS deduction. Senior citizens (60 and above) should submit Form 15H. Even if TDS is deducted, you can claim a refund when filing your Income Tax Return if your total tax liability is less than the TDS amount deducted.
Note: Tax-saving FDs (5-year tenure) qualify for a deduction of up to ₹1.5 lakh per year under Section 80C under the old tax regime. However, the interest earned on these FDs is still fully taxable.
Choosing the right FD strategy in 2026
Compare rates, tenure, and compounding frequency before booking an FD. For short-term needs, look for high-rated banks offering quarterly compounding. For longer-term goals, fixed deposits in public sector banks may offer slightly lower rates but stronger perceived safety.
If you need regular income, choose a non-cumulative FD and receive interest payouts quarterly or monthly. If you want to maximise maturity value, choose a cumulative FD so interest compounds until maturity.
Senior citizen and tax-saving FDs
Senior citizens often get a higher FD rate, typically 0.25–0.5% above normal rates. If you are a senior citizen, compare the cumulative maturity values and choose the frequency that matches your cash flow needs.
Tax-saving FDs locked in for 5 years are a good choice for investors who want guaranteed returns and an 80C deduction. Keep in mind that these FDs cannot be withdrawn before maturity, so use them for goals that are at least 5 years away.
FD vs other fixed-income options
Fixed Deposits are ideal for capital preservation, but they may not keep pace with inflation over the long term. Compare FDs with alternatives such as PPF, post office MIS, and conservative debt mutual funds depending on your risk tolerance and goal horizon.
- PPF offers tax-free returns and a long tenure with government backing, but it is less liquid than a bank FD.
- Debt mutual funds may offer higher returns than FDs, but returns vary with market conditions and are not guaranteed.
- Post office MIS offers monthly income and decent safety, but the interest rate is set by the government and may change periodically.
Frequently Asked Questions
What is the FD interest rate offered by banks?
FD interest rates vary by bank and tenure. Most public sector banks offer 6.5–7.5% for general citizens and 7–8% for senior citizens on tenures of 1–5 years. Small finance banks often offer higher rates (8–9%). Always compare rates before booking.
Is FD interest taxable?
Yes. Interest earned on Fixed Deposits is taxable as 'Income from Other Sources' at your applicable income tax slab rate. TDS at 10% is deducted if your FD interest across all accounts in one bank exceeds ₹40,000 in a year (₹50,000 for senior citizens). Submit Form 15G or 15H if your total income is below the taxable limit.
What happens if I break my FD early?
Most banks allow premature FD closure with a penalty of 0.5–1% on the applicable interest rate. The actual interest paid is the rate applicable for the period the deposit was held, minus the penalty. Some tax-saving FDs cannot be broken before 5 years.
What is the difference between cumulative and non-cumulative FD?
A cumulative FD reinvests interest back into the deposit so it compounds over the tenure — the entire maturity amount is paid at the end. A non-cumulative FD pays out interest at regular intervals (monthly, quarterly, or annually) to your bank account, making it suitable for retirees who need regular income.
Is my FD money safe?
Deposits in banks covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) are insured up to ₹5,00,000 per depositor per bank. This covers both principal and interest. Most scheduled commercial banks in India are covered under DICGC.
Which compounding frequency gives the highest FD returns?
More frequent compounding always yields a higher effective return. Monthly compounding gives a slightly higher maturity value than quarterly, which is better than half-yearly or annual compounding at the same nominal rate. For example, ₹1,00,000 at 7% for 3 years: annual compounding gives ₹1,22,504 while monthly compounding gives ₹1,23,367 — a difference of ₹863.
Can I get a loan against my FD?
Yes. Most banks allow you to take a loan of up to 90% of your FD value. The interest rate on an FD loan is typically 1–2% above your FD rate. This is a useful option if you need emergency funds without breaking the FD and losing interest.
Related Calculators
This calculator provides estimated figures for planning purposes. Actual FD returns depend on the bank's applicable interest rate and specific terms at the time of booking. TDS and tax implications are not reflected in this calculation. Please consult your bank or a tax advisor for exact figures.
About FD Calculator
Compute Fixed Deposit maturity amount for any bank interest rate and tenure. Choose your compounding frequency and get an instant breakdown of principal, interest earned, and final maturity value. This tool is designed to be simple and accessible for users who need quick, reliable results.
When to use this tool
Use the fd calculator when you need an accurate, immediate calculation without installing software or registering an account. It is especially useful for everyday decisions, quick comparisons, and planning where you need numbers fast.
How it works
The calculator applies standard, well-known formulas and conventions appropriate to the domain. Results are computed instantly in your browser to preserve privacy and avoid sending personal data to servers.
Limitations and tips
This tool provides informative estimates and is not a substitute for professional advice. For complex or high-stakes decisions, verify results with a qualified professional. Double-check inputs such as units, dates, and currency settings before making decisions.