How to Use FD Rate Calculator to Compute FD Interest?

Did you know that in the financial year 2020, Indians held over 46 trillion rupees in bank fixed deposits? The data is sufficient to suggest that FD is the most preferred means of investment in India as it is risk-free and assures satisfactory returns. In this blog, we will explore the nitty-gritty of fixed deposits and how to optimize returns using Munim’s FD rate calculator.  

What is the FD Rate Calculator Exactly?

FD rate calculator is a simple online tool that helps you calculate the interest you could earn on your deposit for the given tenure. The interest amount is calculated by taking into account the interest rate, the amount of deposit, and the tenure of the deposit. This calculator also helps you calculate the interest rate you may get on your investments.

Key Functions of the FD Rate Calculator:

• Interest Calculation: Determine the interest amount on your FD.

• Comparison: Compare returns from various FD schemes offered by different banks and financial institutions.

• Financial Planning: Aid in setting and achieving your financial goals.

• Tax Optimization: Choose the right FD tenure and interest payout options to optimize tax savings.

How does FD work?

When you open an FD account, you must deposit a specific amount for the chosen period. This period of investment ranges from 7 days to 10 years. The amount that you have deposited should not be withdrawn.

However, the interest rate varies depending on the investment period and the amount. It is directly proportional to the investment period.

At the end of the investment period, you can reinvest or withdraw.

Eligibility Criteria for Investing in Fixed Deposit in India

Eligible entities for opening an FD account in India include:

• Indian nationals
• Minors
• Senior Citizens
• Companies
• Partnership Firms
• NRIs
• One-person business
• Clubs and Societies

Documents Required to Open a Fixed Deposit Account in India

The following are the documents required to open a fixed deposit account in India:

Identity proof

● Passport

● PAN Card

● Voter ID Card

● Driving License

● Aadhaar Card

Address Proof

● Ration Card

● Passport

● Utility Bills

● BankPassbook

● Certificate/ID Card issued by Post Office

How to Use Munim’s FD Rate Calculator?

Follow these simple steps to use the FD rate calculator:

• Enter the Investment Amount: Specify the amount you wish to deposit.

• Input the Interest Rate: Enter the rate of interest offered by your bank.

• Select the Tenure: Choose the duration of your investment.

• Check the Results: Review the calculated returns on the right side of the calculator.

6 Tips to Maximize Returns on Fixed Deposit Using Munim’s FD Interest Rates Calculator

Let’s discuss some of the important tips to optimize your FD investment with the use of an FD interest rates calculator:

Consider different options: Before finalizing the preferred financial institution with which you want to invest money, assess the different options available with different banks and calculate the returns you could earn. Choose the option that gives you the maximum returns.

Feeding the accurate date: You will obviously get accurate results only when you feed the right data. Ensure you are feeding the input data accurately to get precise calculation results.

Comparative analysis: You can utilize the FD calculator to compare different FD interest rates offered by various financial institutions/banks. This comparison will help you to earn maximum returns.

Manipulating tenures and interest rates: You can use the FD calculator to choose the most lucrative option available that gives maximum return in the least time, allowing you to achieve your investment goals as soon as possible.

Diversifying your investment: The FD calculator helps you calculate the return on different FD schemes. Based on that, you can choose to diversify your investment, considering the tenure and interest rates.

Periodic Monitoring: As and when the RBI announces a change in interest rates, consider re-assessing your return on FD using the FD rate online calculator.

Summing Up

So, after reading this blog on the basics of FD and how to use the FD rate calculator, we hope that you are self-sufficient in making an investment decision. However, you better seek expert advice if you are still in doubt.

By any chance, if you are a businessman seeking accounting software, then do check out Munim – Accounting & GST software for SMEs in India. The best thing about Munim is it is free for the financial year 2024–25.

Frequently Asked Questions on Fixed Deposit

What is auto-renewal in fixed deposit?

Auto-renewal allows you to reinvest the principal amount along with interest for the same tenure at the current interest rate. 

How do you calculate interest on fixed deposit SBI?

Use Munim’s FD rate calculator to precisely calculate the interest earned on a fixed deposit in SBI.

How do you save tax on fixed deposits?

By Investing in Tax Saver FDs, under Section 80C of the Income Tax Act you can save up to ₹1.5 lakh per annum on income tax.

Are mutual funds better than fixed deposits?

Though mutual funds provide higher returns than FDs, they are subject to market risk. On the other hand, FDs are secured and provide assured returns.

How many types of fixed deposit?

There are various types of FDs offered by banks and financial institutions to cater for the needs of their customers, which are as follows:

1. Conventional FD – These FDs are ordinary deposits with no special provisions. The tenure of these FDs ranges from 7 days to 5 years, commonly.

2. Tax-saving – These FDs provide tax savings under section 80C of the Income Tax Act. They give the opportunity to earn fixed returns while saving on tax.

3. Senior Citizen FD – These FDs are offered only to senior citizens over 60. The benefit of this type of FD is that it offers higher interest rates than conventional FDs.

4. Cumulative FD – The interest earned is reinvested along with the principal amount.

5. Non-cumulative FD – The interest earned on the principal amount is paid to the investor monthly, quarterly, or annually, depending on the investor’s preference.