Choose how often interest is compounded (most banks compound quarterly) and add an inflation rate to see whether your FD is really growing your money in today's terms.
How FD maturity is calculated
A = P × (1 + r ÷ n)^(n × t)
- A
- Maturity amount
- P
- Deposit amount
- r
- Annual interest rate
- n
- Compounding periods a year (4 for quarterly)
- t
- Tenure in years
This is a cumulative (reinvestment) FD where interest is added back to the deposit and earns interest itself. Payout FDs that pay interest monthly or quarterly earn slightly less.
FD interest is fully taxable at your slab rate, and banks deduct TDS when interest exceeds the yearly threshold. Senior citizens usually get 0.25 to 0.50% higher rates.
Getting more from fixed deposits
A few simple choices can lift FD returns without adding risk.
- Compare rates across banks and small finance banks; deposits are insured up to ₹5 lakh per bank.
- Ladder deposits across tenures so some money matures every year.
- Submit Form 15G or 15H if your total income is below the taxable limit to avoid TDS.
- Consider a 5-year tax saver FD for the 80C deduction under the old regime.