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# How to Calculate Interest Rate for Fixed Deposit?

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Everyone wants to have a stable life, so they can fulfil future needs without borrowing money. However, it requires careful planning on a long-term basis to achieve self-sufficiency. Savings and investments has been the ultimate tool that allowed individuals even having lower income to make significant expenses like buying a house or spending on a marriage.

Nevertheless, newer methods and tools have been developed to help you save as well as earn more through investment. Fixed deposits are the most reliable way of getting better returns for a set amount of funds.

## What are Fixed deposits?

Fixed Deposits are a powerful financial tool that helps in the preservation and growth of your surplus funds. The amount of returns that you receive on these investments depends on the fixed deposit interest rate provided by the respective Bank or Non-Banking Financial Companies (NBFCs).

The advantage you get with fixed deposits is that it can be efficiently re-invested for increasing your overall income. Furthermore, you can also claim tax benefits by investing in fixed deposits as per the Income Tax Act, 1961.

## How is it Calculated?

There is a general formula used to determine the returns on fixed deposits. It also helps in evaluating how much money you should invest to get the best possible benefits.

A = P [1 + r/100](if interest is added annually)

A = P [1 +(r/4)/100]4*n and A = P [1 + r/25]4n (if interest is added quarterly)

In this formula,

• Principle Amount of Deposit = P
• The frequency of Interest = n
• Amount After Maturity = A

The above formulas show the calculation of compound interest. Alternatively, you can also use the FD Calculator to determine the exact amount of returns you will receive after maturity of the fixed deposit.

There are two types of investment options available in fixed deposits, namely cumulative and non-cumulative fixed deposits. In cumulative FDs, the interest that you have earned in the first year is re-invested in the next year to get higher overall returns. On the other hand, non-cumulative option can provide regular interest payouts for individuals seeking regular income from FD investments.

## Using the FD Interest Calculator

You can select the customer type, the type of FD (Cumulative or Non-Cumulative) and input the amount and tenor of the fixed deposit investment. Entering these details in the Fixed Deposit Calculator will help you determine your maturity amount.

You can use the calculator to understand the range of options on different tenures and to figure out the range of principal that can be invested in the FD to get higher income. Invest in multiple FDs by using the calculator to calculate the investments. Furthermore, you can also forecast the interest rate you can avail according to the term of the investment.

## Benefits of Fixed Deposits with Bajaj Finance

Bajaj Finance brings the element of technology and flexibility to you with specialized Fixed Deposits. By providing the highest FD Interest Rate of 8.40%, Bajaj Finance is wholly dedicated towards maximizing your investment returns.

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