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When you invest your funds in a fixed deposit, the earnings you gain from it are your interest income. Depending on the amount you invest, the chosen tenor and the FD interest rate, your earnings vary.

The cardinal rule is that the longer you stay invested, the higher your earnings. So, comparing FD rates from different issuers is essential as that helps you generate higher potential returns.

For instance, if you want to earn ₹5 interest for a ₹1 Lakh FD, you may do so by choosing the right issuer. All you need to do is calculate your interest earnings using simple interest or compound interest formula.

Read on to know more about how you can calculate ₹5 interest per month on a deposit of ₹1 Lakh.

## Understanding Different Formulae for FD Interest Calculation

Consider a hypothetical example to know how these formulae work. Here, the ₹5 interest for a ₹1 Lakh FD is calculated via non-cumulative mode. In a non-cumulative FD, you can earn returns on a monthly, quarterly, half-yearly or yearly basis.

Hence, your earnings are not reinvested, unlike in a cumulative FD, where the power of compounding comes into play. See the table below to understand the calculations using different methods.

 Calculation Method Formula Illustration ‘₹5 interest for ₹1 Lakh per month’ Method Assuming you plan to earn ₹5 interest per ₹100, the annual interest rate can be roughly translated to 5 X 12 = 60%. For a ₹1 Lakh FD, earning monthly interest payouts at ₹5 interest, your approximate interest rate will be 60%.  Monthly interest: 1,00,000 x 5/100 = ₹5,000 Simple Interest Method The formula is as follows: Principal X Rate X Time /100 If you are considering one month, then T = 1/12 Assume you have invested ₹1 Lakh for a period of 1 year. The interest you earn in a year will be as follows: SI = 1,00,000 X 60/100 X 1 = ₹60,000 Monthly interest: 60,000/12 = ₹5,000 Compound Interest Method Compound Interest = [P (1 + r/n)nt] – P Here, P = Principal amount r = Interest rate n = Number of times the interest gets compounded t = Tenor Assume you have invested ₹1 Lakh for a year, with the interest being compounded once annually.  Interest amount: [1,00,000 X (1+60/100*1)^1*1] - 1,00,000 = ₹60,000 Monthly interest: ₹60,000/12 = ₹5,000

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## ₹5 Interest for a ₹1 Lakh FD Per Month

The total monthly interest you can earn on a ₹1 Lakh FD will be approximately ₹5,000. This is just an approximate amount and may vary if the FD interest is compounded more than once yearly. When this happens, your monthly payout and total interest calculated may vary.

Hence, consider these factors when calculating ₹5 interest for a ₹1 Lakh FD. You can choose any suitable method to compute your interest earnings.

That said, calculating manually can be prone to errors and is a time-consuming process. As these methods are complex, comparing various FD rates can also become quite cumbersome.

To avoid this, you can use an FD calculator to help you zero in on the best plan. Access the calculator on Bajaj Markets and estimate the total interest earned within seconds. On the same platform, browse multiple FD issuers, compare different interest rates, and book an FD right away.

## FAQs on How to Calculate ₹5 Interest for ₹1 Lakh

### How to calculate ₹5 interest for a ₹1 Lakh FD using simple interest?

You can compute using the simple interest formula, which is:

SI = Principal X Rate X Time /100*Note that if you are calculating interest for a month, i.e. T = 1/12

### How to calculate ₹5 interest for a ₹1 Lakh FD using compound interest?

You can assess your interest earnings using the following compound interest formula:
Compound Interest = [P (1 + r/n)nt] – P

### Are there any other alternative ways to calculate interest earnings?

Yes, you can assess your interest income beforehand using an FD calculator. All you have to do is enter the duration, principal amount, and the applicable interest rate to calculate returns in a hassle-free manner.

### What is the total monthly interest I can earn on a ₹1 Lakh FD?

The monthly interest you can earn depends on the applicable interest rate and the tenor you choose. Once you enter these parameters on Bajaj Markets’ FD calculator, you can compute your interest earnings instantly.

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