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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

## ₹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.

## Disclaimer

The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort.

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

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

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

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

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.

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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Earn interest up to 8.60% p.a. by investing in a Bajaj Finance Fixed Deposit | Rated CRISIL AAA/ STABLE and [ICRA]AAA(stable)
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