Ways to Calculate Interest Rate on Fixed Deposits

When you invest in a fixed deposit account, you know only three variables – deposit amount, tenor and interest rate. If you want to know the value and growth of your investment or interest receivable in case of periodic payouts, there are two ways to do it.

Manual Mathematical Formula

The base mathematical formula for FD interest rate calculation is 

A = P (1 + r/n) ^ (nt)


A is Maturity Amount

P is Deposit Amount

r  is Rate of Interest

n is Compounded Interest Frequency

t is  Tenor

This formula may be easy to use when you have to make only one time FD investment or you just want a rough estimate. Otherwise, it has its own limitations:

  • It is very time consuming – you need a pen and paper, a scientific calculator or a Microsoft Excel sheet.
  • It does not give accurate results. 
  • It is a tedious method for calculating the returns from multiple fixed deposit account investments at a time.
  • It is difficult to determine periodic interest payouts.

Hence, it is not advisable to use the manual mathematical formula for FD interest calculation.

Online FD Interest Calculator

An online FD interest calculator overcomes all the drawbacks of the mathematical formula. It is a tool that automatically computes the results whether it is regular FD or tax saving FD. It is a good way to make an informed investment decision and maximize your returns. You can do calculations as many as times with varying FD amount, the tenor interest rate to strengthen your investment portfolio.

You can easily find a reliable online FD calculator on the official website of reputed NBFCs such as Bajaj Finance. Moreover, it is also a free tool for users. You need to enter the deposit amount, tenor and interest rate. 

Within a few seconds on a single click, you will get detailed and precise information on:

  • Maturity date 
  • Total interest payout at the end of the maturity if you have chosen cumulative FD. When you invest in cumulative FD, interest is calculated annually on a compounding basis and paid on maturity with the principal amount.
  • Interest rate and interest payouts if you have chosen non-cumulative FD. When you invest in non-cumulative FD, the calculator computes interest rate and payout as per the frequency chosen – monthly, quarterly, half-yearly and yearly. 

Bajaj Finance FD Calculator Monthly Interest tool is also one of the best tools to determine returns if you need a monthly regular source of income. 

Manual mathematical formula and online FD calculator are two ways to compute interest rate on fixed deposits. The former has its shortcomings because it is complex and lacks precision. On the contrary, an online calculator is not only quick and easy to calculate returns but also gives accurate results. It gives you complete visibility of the value and interest of your FD during the tenor. If you are looking to estimate monthly income from FD, you can also consider using FD Calculator Monthly Interest tool. Just make sure that if you use a reliable tool from a reputed financier to ensure the authenticity of the results.

Apart from the facility of an online FD calculator and online fixed deposit account opening process, Bajaj Finance FD provides several other benefits such as loan against FD, premature withdrawal of FD, flexible tenors, high interest rates (up to 7.85%) and high stability assured by CRISIL and ICRA ratings.

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Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.