A fixed deposit is a reliable investment tool for saving and growing your money. The rate of interest on your FD depends on which bank you choose, your age (senior citizens often get a higher rate of interest), the amount you plan on investing, and some other factors.
Once the rate of interest is determined, the FD Interest is calculated using a formula for compound interest. Compounding interest means that you earn interest not only on the amount you invest but also on the interest earned.
Calculation of FD Interest
The formula to calculate FD Interest at Compound Interest is:
A = P (1+r/n) n*t
A = The Maturity Amount (The Final Amount, which is Principal + Interest)
P = The Principal (The amount you invest at the onset)
R = The Rate of Interest (This is determined by the individual banks based on RBI guidelines)
T = The Number of Years (The period for which you are investing your money)
N = The Compounded Interest Frequency (This implies after what period will the interest be compounded. If the period is monthly, then n = 12)
With the digitization of the banking services, all these calculations happen digitally and every process, from interest calculation to crediting the maturity amount, is automated.
Additionally, with more and more customers preferring online banking solutions, banks have started offering online FD calculators that help you calculate the final maturity amount in seconds.
An online FD calculator is seamless and easy to use. Simply input:
The type of customer: The age and gender of the customer are important here as senior citizens and women (in some FD products) enjoy a higher rate of interest.
Type of fixed deposit: Some products have a higher interest rate than others. Also, it MIDS (Monthly Interest Deposit Schemes) and QIDS (Quarterly Interest Deposit Schemes) will have different interest calculations than normal FDs.
The Principal Amount: The amount you wish to invest
The Tenure of the Fixed Deposit: The number of years you wish to invest the Principal for
Click on Submit and the calculator will display the final amount you will receive on maturity.
How to ensure you get higher returns on your FD investments?
Now that you know the factors that affect the interest calculation let us understand how you can maximize your returns.
Longer tenure will help you get higher returns
Larger principal amount will ensure higher returns
Opt for banks that offer a higher rate of interest
Go for specific products that offer a higher rate of interest than others
Always choose cumulative fixed deposits for higher interest
Always keep your interest deposit at maturity. The higher the frequency of interest deposit (monthly deposit or quarterly deposit), the lower will be your interest amount.
Fixed Deposits with YES BANK
The fixed deposits offered at YES Bank are extremely flexible, and you can choose them as per your convenience of schemes and deposit amounts. Moreover, you can choose a tenure ranging from as little as 7 days to 10 years!
Along with best-in-class interest rates and features, YES Bank also offers easy liquidity and a higher rate of interest to senior citizens. You can also opt for a sweep-in facility that offers liquidity of monies in your savings or current account. This is applicable, however, only for FDs worth less than two crores.
Overdraft Facility: Get up to 90% of the deposit value as a loan at competitive rates.
Tax Saver Deposits: Invest in five-year deposit schemes for attractive tax benefits.
Anywhere Banking: Avail free banking at any of the YES BANK branches in India.
Superior Interest Rates: Earn compounded interest and ensure high returns on your investment.
Auto-Renewal: Forgot to give maturity instructions? No worries! Your fixed deposit will auto-renew and keep accruing interest.
Fixed deposits are an excellent tool to keep your money safe and earn passive income. It provides you with benefits and promises reliable financial security.