# Fixed Deposit Calculator

Fixed deposit calculator helps you calculate interest earned and maturity amount on your fixed deposits. Fixed deposits are term deposits which you can open in any bank or post office which come with a fixed tenure and fixed rate of interest.

## What is a Fixed Deposit ?

Fixed deposits(FD) are the most popular way to save money in India. Money saved in fixed deposit is relatively risk free as these deposits are backed by banks and other government institutions. Interests on fixed deposits vary from one bank to another and also change with tenure of fixed deposit. In general higher the tenure of fixed deposit, higher is the interest rate.

## Interest Payout and Reinvestment option in Fixed deposits

You can structure your fixed deposits in 2 ways one is an interest payout options in which interest gets credited to your account periodically or at the end of the tenure. Second is reinvestment option in which your amount at maturity is investment back which is called reinvestment option.

## How does a Fixed deposit calculator works ?

Fixed deposit calculator helps you calculate interest earned as well as amount at maturity for your deposits. Inputs required for your fixed deposits include:
• Principal Amount
• Interest Rates
• Tenure of Deposit
Based on these 3 inputs Fixed deposit calculator calculates interest rate and maturity amount on your deposit.

## Understanding Simple interest and Compound interest

Simple interest as the name suggests is simply the interest earned on the intital principal amount,when you calculate simple interest you do not calculate interest on interest and all interest calculations happen only on principle.

In case of compound interest calculations, interest gets calculated on not only the principal but also on ongoing interest you earn. Let me explain it with ane example.

Let’s say you deposit Rs10,000 with an interest rate of 10 % for 5 years . Here is how your maturity amount will vary

As per simple interest calculations, Interest earned will be Rs 1000 for every year and hence at the end of 5 years you will have Rs 5000 as interest and your total amount on maturity will be Rs 15000.

If you are doing compound interest calculations and interest is compounded annually than in 5 years you will earn interest =6105 , so at the end of 5 years you will have Rs 16105 as maturity amount.

The formulae to calculate maturity amount for compound interest rate (where interest is compounded annually) is as below A= P (1+R/100)^n
Where A → Amount
P → Principal
R ---> Rate of interest
N→ Tenure of investments