What is a fixed deposit?
A fixed deposit locks a lump of money with a bank for a fixed tenure at a fixed interest rate. It is the default “safe” instrument for Indian savers: the return is known on day one, and it does not move with the market.
FDs come in two flavours, and this calculator handles both. A cumulative FD reinvests the interest every quarter and pays everything together at maturity — best for growing a sum. A payout (non-cumulative) FD pays the interest out to you monthly, quarterly, half-yearly or yearly and returns the deposit at the end — the classic “monthly income” setup for retirees and anyone living partly off interest.
How banks calculate FD interest
Nearly every Indian bank compounds cumulative FDs quarterly. That is the formula this calculator uses (the same engine as our compound interest calculator, fixed at quarterly):
A = P × (1 + r/400)^(4 × t)
Worked example: ₹1,00,000 at 7% for 2 years grows to ₹1,14,888 — ₹14,888 of interest. Simple interest at the same rate would pay ₹14,000; the extra ₹888 is each quarter’s interest itself earning interest for the remaining quarters.
Why your FD receipt shows a “yield” higher than the rate
Keep the same ₹1,00,000 at 7% for 5 years and it matures at about ₹1,41,478. Banks describe that on the receipt as an annualised yield of ~8.30%: total interest (₹41,478) divided by principal and years. The rate is still 7% — the yield number simply spreads the compounding benefit evenly across the tenure, and it grows with longer tenures. The calculator shows this yield for every cumulative result so the receipt will not surprise you.
Monthly income from an FD
In payout mode, a ₹10,00,000 deposit at 7% pays about ₹5,833 every month (₹10,00,000 × 7% ÷ 12), with the full ₹10 lakh returned at maturity. Because the interest leaves instead of compounding, the total earned is less than a cumulative FD over the same tenure — that is the price of the income. One honest caveat: many banks pay monthly-payout FDs at a marginally discounted rate, since interest is being paid before the quarter completes; treat the monthly figure as a close estimate and check your bank’s exact number.
Why we ask you for the rate
FD rates differ by bank, by tenure and by depositor — small finance banks often pay more than large ones, odd tenures like 444 days carry special rates, and senior citizens typically get an extra 0.25–0.50%. Any table we shipped would go stale within weeks, so this calculator stays bank-agnostic: take the rate from your bank’s latest FD card and enter it here to get the exact projection.
Safety and tax, briefly
Bank deposits are insured by DICGC (an RBI subsidiary) — currently up to ₹5 lakh per depositor per bank, covering principal and interest together; spreading large sums across banks extends the cover. FD interest is fully taxable at your slab rate, and banks deduct TDS once your yearly interest crosses a threshold (higher for senior citizens) — submit Form 15G/15H if your income is below the taxable limit. A special 5-year tax-saver FD qualifies for the 80C deduction under the old regime in exchange for a hard lock-in. If what you actually want is a long-term, sovereign-guaranteed deposit whose interest is never taxed, compare with the PPF. This calculator shows pre-tax figures.