How to calculate FD interest for deposits with premature withdrawal

Charlotte Miller

How to calculate FD interest for deposits with premature withdrawal

One of India’s most popular investment options for several decades is Fixed Deposits. This is because they are considered a safe investment, especially for those who are conservative, as they offer a fixed return rate and are not subject to market fluctuations. These are usually offered by financial institutions/banks and come with various tenures ranging from a few months/years. 

Nowadays, the potential investor is smart enough to calculate fd interest beforehand in order to be aware of what they’ll be getting from their investment. 

What is a fixed deposit?

As the name implies, it is a type of investment instrument offered by banks and financial institutions in which an investor deposits a lump sum of money for a fixed tenure. This tenure usually ranges from a few months to a few years, and the rate of interest offered on this investment is usually higher than that offered on savings accounts and is fixed at the time of investment. 

Here, the investor earns interest on the principal amount for the FDs duration. The interest earned can be paid out at regular intervals, such as monthly, quarterly, or annually, or reinvested into the FD. However, it is essential to keep in mind that the interest rate on FDs varies depending on the tenure of the deposit and prevailing market conditions.

(Tip: Use a fd interest rates calculator before investing your hard-earned money.)

What are its advantages?

  1. Assured returns

The rate of interest on an FD is fixed at the time of deposit and is not affected by any kind of fluctuations in the market. This means that the depositor can be certain of the returns they will receive. 

  1. Regular income

For those who seek a regular income, an FD is a good and wise investment for them. This is because they can opt for interest payout on it, either monthly or quarterly. 

  1. Easy withdrawal

An FD can be broken or withdrawn before the tenure ends whenever an individual requires money. However, a minor penalty is incurred if one plans to withdraw before the term ends. 

  1. Tax-free interest

The interest amount earned over the total investment is totally tax-free. However, keep in mind that it is only up to a certain limit. 

How to calculate interest on FD?

In the current era of modern technology, there is no need to pick up a pen and paper for calculations. Manual calculations are old school and sometimes lead to inaccuracy, ultimately resulting in wrong leads. 

Nowadays, specific tools available on your smartphone only give you accurate results within a few seconds. Around a month back, I was planning to invest in a fixed deposit, so one of my friends advised me to use an fd calculator online. After thorough research, I used various tools but found the one offered by Bajaj Finserv the best!

  1. Download the app from the App Store or Play Store.
  2. Sign up after entering your mobile number
  3. Log in
  4. On the home page, tap on three bars situated on the top right. 
  5. Here, you’ll see ‘Calculators & Buying Guides.’ 
  6. Go to ‘Deposits Calculators’
  7. Choose ‘Fixed Deposit Interest Calculator.’
  8. Fill in the required details
  9. Experiment as per your requirement.