When referred to a recent report of Bloomberg Quint, there was a recorded 44.7% contribution in term deposits by fixed deposits that have tenor between 1 and 2 years. Whereas, contribution by fixed deposits over 2 years of tenor were recorded at 32%.
This data is indicative of the fact that individuals seeking such investment options are well-aware of the term benefits as they are differentiating between their preferred term deposits. Therefore, individuals looking forward to investing their money on fixed deposits can utilise FD calculator and compute maturity amount or interest availed on the deposited amount.
What is maturity amount?
Maturity amount is the amount availed by an investor after the end of lock-in period. For example, an individual has invested a sum of Rs.30,000 in a fixed deposit for 3 years at an interest rate of 7%. Then, total amount availed by that individual at the end of this period is Rs.36,751. It includes interest pay-out and is the maturity amount.
This maturity amount is calculated for entire range of tenor irrespective of the nature of interest pay-out, i.e. cumulative or non-cumulative.
How to calculate the maturity amount?
Maturity amount for fixed deposit India can be calculated by computing the value using the following formula.
A = P (1 + R/n) ^ nt
- A is a Maturity amount.
- P is the deposit amount.
- R is the rate of interest.
- n is compounded interest frequency.
- t is tenor of deposit.
An individual can either put the values in an FD calculator to compute the maturity amount or can evaluate the values themselves. Therefore, individuals must be familiar with the interest rates offered by the financial institution to them for a specific tenor range to be able to compute this value with accuracy.
For investments made on fixed deposit that have a tenor of 1 year or 12 months, maturity amount can be calculated by using the formula to compute simple interest.
Simple interest, SI = (P * r * t)/ 100.
Where P is the amount of deposit, r is the rate of interest, and t is the tenor of term deposit made.
The simple interest so calculated is the interest pay-out to an individual for 1-year fixed deposit.
To calculate the maturity amount,
A = simple interest + deposit amount.
Now, reputed financial companies provide FD calculator to customers willing to invest in a term deposit. Candidates can streamline their financial plan with Bajaj Finance FD calculator and make wise investment decisions.
Furthermore, the maturity amount calculated by making use of an FD calculator is inclusive of the interest pay-out for a term deposit. Individuals can choose for cumulative type of fixed deposits and decide to receive the interest pay-out along with the deposit amount at the end of tenor. Also, they can opt for non-cumulative type of fixed deposit and receive interest monthly, quarterly, half-yearly, or annually.
Interest pay-out = maturity amount – deposit amount.
Therefore, individuals opting for fixed deposit in India can calculate the maturity amount and interest payment beforehand and invest accordingly.
However, premature withdrawal of fixed deposits affects your interest calculation as the pay-out is now calculated on the new tenor and individuals may have to pay the penalty for this.
FD interest rates
Rate of interest for a fixed deposit varies from customer to customer depending on their type, as such
- New customers.
- Senior citizens.
Also, the rates of FDs change by the type of fixed deposit, i.e. cumulative or non-cumulative. Non-banking financial companies like Bajaj Finance provide up to 8.10% rate of interest on fixed deposits that go up to 8.35% for senior citizens.
Opportunity of stable returns makes fixed deposits a feasible option for investment. The intent of providing FD calculator to prospective consumer is to arrange for a resource that can help them gain information on the investment they are planning to make.
Individuals can provide the associated input variables to compute the maturity amount receivable at the end of the tenor, in case they have availed a cumulative fixed deposit. Non-cumulative types of fixed deposits have the same maturity amount even though the interest pay-out is received periodically as chosen.