Fixed Deposits are an easy and convenient option to secure money for anyone looking for a safe route. Indian people tend to feel attracted to Fixed Deposits since they are one of the safest options to save for the future without any market risks.
While Fixed Deposits are convenient options, many people are still unaware of how they work. There are many misconceptions about how a Fixed Deposit works. With the new Fixed Deposit Calculator facility, calculating the amount has become easier than ever!
So, what is a Fixed Deposit?
A fixed Deposit, commonly known as FD, is a type of investment that allows you to safely invest in a time-bound deposit in exchange for a rate of interest. Banks offer different interest rates based on their profit which are fixed. To open a Fixed Deposit, a person needs to have an account with a specific bank, and then they can invest a lump sum into the bank for a fixed period. Fixed Deposits can be as short as three months and last up to 20 years. The banks invest the amount in their business for a fixed term and share a part of their profit as interest to the depositor.
Fixed Deposit interests are paid monthly, quarterly, annually, or cumulatively on completion. They also offer renewal of the deposit but the rate of interest changes to the most recent ones when they get renewed.
What is a Fixed Deposit Calculator?
A Fixed Deposit Calculator is helpful for anyone who wants to invest in a Fixed Deposit. It is a free tool available on the internet that allows anyone to calculate the return amount on a Fixed Deposit. Generally, the possible return on a Fixed Deposit investment depends on these things:
⮚ The interest rate offered by a bank.
⮚ The entire invested amount.
⮚ The tenure of investment.
⮚ The type of interest payout since monthly interest rates tend to be lower than the cumulative ones.
⮚ And finally, whether the depositor can withdraw before completing the term.
These common factors will affect how much you can earn from a Fixed Deposit. Generally, Fixed Deposits are free from market risks because they do not depend on the share market. Instead, they rely on the banks’ profit. These deposits are guarded by the Reserve Bank of India, which protects them from possible loss. The banks are obligated to pay you the interest, as promised, making it safe for first-time investors.
How to use a Fixed Deposit Calculator?
Generally, a Fixed Deposit Calculator is a free option available for anyone. It is possible to access it over the internet or through the application of a specific bank. Minimum details are required to calculate the return. You only need to put the following details in most cases:
✔ The amount you want to invest.
✔ The term you are going for (i.e., three months to 20 years).
✔ The type of interest payout (monthly, quarterly, annually, or cumulative).
✔ Rate of interest.
Usually, if you use a website offered by the chosen bank itself or the application, they will not ask for the interest rates; they fill it for you automatically after entering the tenure. The interest rate might depend on tenure, as long-term investments tend to have better interest rates than short-term ones.
Things to keep in mind:
⮚ It is essential to know the tenure because premature closure can affect the overall interest. Many banks only offer the capital amount in cases of early closure.
⮚ The rate of interest might vary depending on the type of interest payouts. Frequent payouts have lower interest offerings.
⮚ In renewal cases, the previous interest rate becomes invalid if there is any change in the interest rates. The investment gets renewed with the new charges.
⮚ TDS might be applicable on the matured amount, depending on the amount.
Fixed Deposit Calculators are free and easy, so use them before going for an FD.