How is Fixed Deposit interest calculated?

A fixed deposit scheme is an investment instrument offered by banks and non-banking institutions. FD accounts allow you to deposit your money and earn interest on it — more than you would do through a savings account. With a fixed deposit account, you have the option to deposit a lump sum of money for a certain period — called the lock-in period — and wait for it to attain its maturity value.

After the money is invested with a reliable financer, it starts earning interest. One of the primary defining criteria of a fixed deposit account is that you cannot withdraw the money before its maturity value — during its lock-in period. However, if you choose to do so and break your fixed deposit before it attains its maturity, then you may do say after paying a penalty.

Features of a fixed deposit account

Fixed deposit accounts have grown to be popular because of the several features they provide. Here are some of the key features of a fixed deposit account:

  • Being a safe investment instrument, FD accounts offer stability and security

  • Your returns on your deposits are secure — there is no loss of capital

  • You have the option to opt for periodic payout on your fixed deposit

  • Market fluctuations do not affect your savings

  • Some financiers offer a higher rate of interest for senior citizens

Interest rates on fixed deposits

Another reason why fixed deposits have garnered much popularity is that they offer a high and stable rate of interest. Fixed deposits on FInserv MARKETS offer an interest rate 8 percent to 8.60 percent. For senior citizens, there is an extra 0.35 percent added to the existing rates to make the deposits more lucrative for them.

If you want to renew your fixed deposits on FInserv MARKETS, then you get 0.10% over and above the rate of interest at which the deposit is booked.

How is FD interest calculated?

The interest you earn on your fixed deposit is calculated by taking several measures, such as the tenor of the investment, the deposit size, and whether your deposits are cumulative or non-cumulative. With cumulative FDs, the interest you earn on the principal amount will be compounded annually. This type of FD scheme grows your savings steadily, and the entire amount is paid back with interest at the time of maturity. On the other hand, with non-cumulative FDs, the interest you earn on your principal amount will be paid out at regular intervals — quarterly, semi-annually, or annually.

One of the easiest ways to calculate interest and maturity value of your investments in a fixed deposit account is by using the online fixed deposit calculator. The online calculator helps you evaluate your investment plans and helps you scheme it out in such a way that you can make the most out of it — gaining better returns with time. Using the online calculator is quite easy. Here are the steps on how to use the online fixed deposit calculator:

  1. Define what kind of customer you are — new customer, existing loan customer, or a senior citizen

  2. Choose between cumulative or non-cumulative fixed deposits — whichever defines your investment goals the best

  3. Enter the amount that you want to deposit in your fixed deposit

  4. Select the tenor of your investment — how long you want your money to be invested in

One all these steps are done, the total amount at the time of maturity will be displayed on your screen.

A low minimum deposit

Another great feature of opting for a fixed deposit account is that it lets you start with a minimum deposit of Rs 25,000, which makes it easier to invest in this scheme. With an investment amount as low as this, you can invest anytime and anywhere without having to wait for your savings to build up over time.

Even small amounts of investment, in the long run, can add great returns to your investment portfolio.

High credibility

One of the primary concerns that come with investing money online is the credibility that comes with it. Often, one may wonder whether their investments are in safe hands. Fixed deposits on Finserv MARKETS have an edge here as they come with a stable ICRA MAAA and CRISIL FAAA rating, which means that your investment is in safe hands.

A higher credibility rating in a fixed deposit scheme ensures that your investment is unaffected by fluctuations in the market.

How to apply for a fixed deposit account

It is quite easy and hassle-free to open a fixed deposit account online. It is a 3-step process that can be done anytime on your smartphone or your computer. Here are the steps to opening an FD account online after you log into Finserv MARKETS:

  1. Fill in your personal details and the details of your beneficiary, choose the amount you are investing, the plan type — cumulative or non-cumulative, and the tenor for your investment.

  2. Upload the documents that are required to complete the Know Your Customer (KYC) process.

  3. Once you have uploaded all the documents, you can pay the fixed deposit amount and complete the online application process for opening the FD account.

  4. All said and done, you have the option to track your investment and returns online anytime, anywhere.

A fixed deposit investment is for anyone who wants a safe investment channel to grow their savings without any risk to the principal amount. You should choose a fixed deposit scheme if you want to diversify your investment portfolio. It should form a significant chunk of your investment portfolio as it is a safe and risk-free means of investment.

Besides senior citizens who get a higher rate of interest on their deposits, an FD account is also for the young people who do not want to wait for a long time to grow their savings, and instead want a safe and risk-free means to grow their investment. Fixed deposit accounts are a reliable option to meet both short and long term goals.

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