Complete guide
Reviewed July 2026A fixed deposit is India's default safe investment: you lock a lump sum with a bank for a fixed term at a fixed rate, and the maturity value is known to the rupee on day one. That certainty is the product — and it makes an FD the one investment you can and should calculate exactly before you invest.
This calculator computes maturity value and total interest for any principal, rate and tenure using quarterly compounding — the convention nearly all Indian banks apply to cumulative FDs — and lets you compare compounding frequencies where an institution differs.
Beyond the arithmetic, the decisions that actually change your outcome are structural: cumulative vs payout, TDS handling, laddering across tenures, and knowing the real cost of breaking an FD early. All covered below.
FD maturity formula
M = P × (1 + r/4)^(4t) (quarterly compounding) M = maturity value P = principal deposited r = annual rate (decimal) t = tenure in years Effective annual yield = (1 + r/4)^4 − 1
Quarterly compounding means a '7.25%' FD actually yields 7.45% per year. Banks advertise the nominal rate; comparisons between banks and against other products should always use the effective yield.
Worked example
- ₹5,00,000 at 7.25% for 3 years, quarterly compounding.
- Quarterly rate = 7.25 ÷ 4 = 1.8125%; periods = 12.
- (1.018125)^12 = 1.2405.
- Maturity = 5,00,000 × 1.2405 = ₹6,20,258.
- Interest earned = ₹1,20,258 — versus ₹1,08,750 under simple interest: compounding added ₹11,508.
Maturity at a glance
| Rate | 1 year | 3 years | 5 years |
|---|---|---|---|
| 6.5% | ₹1,06,660 | ₹1,21,341 | ₹1,38,042 |
| 7.0% | ₹1,07,186 | ₹1,23,144 | ₹1,41,478 |
| 7.5% | ₹1,07,714 | ₹1,24,972 | ₹1,44,995 |
| 8.0% | ₹1,08,243 | ₹1,26,824 | ₹1,48,595 |
Cumulative vs payout, TDS and taxes
Cumulative vs non-cumulative
Cumulative FDs reinvest each quarter's interest, delivering the full compounding shown above at maturity. Non-cumulative FDs pay interest out monthly or quarterly — right for retirees living on the income, but the payouts don't compound, so total earnings are lower (and monthly-payout rates are set slightly below the nominal rate, at a discounted equivalent).
Tax reality
- FD interest is fully taxable at your slab rate, accrued yearly — a 7.25% FD yields about 5.0% post-tax in the 30% bracket.
- Banks deduct TDS at 10% when interest across your deposits in that bank exceeds the threshold (₹50,000 general / ₹1,00,000 for senior citizens per FY 2025-26 rules; verify current limits). TDS is a prepayment, not the final tax.
- Submit Form 15G/15H (income below taxable limit) to stop TDS; senior citizens also get a deduction up to ₹50,000 on deposit interest under 80TTB (old regime).
- 5-year 'tax-saver' FDs qualify for 80C (old regime) but lock your money completely — no premature exit, no loan against them.
Breaking an FD early — and the ladder that avoids it
Premature withdrawal re-prices your deposit at the rate for the tenure actually served, minus a penalty (typically 0.5–1%). A 3-year FD at 7.5% broken at 1 year might earn just 6.0% (1-year card rate 6.5% − 1% penalty (approx)) — the certainty you paid for, forfeited.
The fix is laddering: split the corpus into 3–5 FDs maturing in successive years. Something matures every year (liquidity without breaking anything), each maturity rolls into a new long-tenure FD at prevailing rates (averaging out rate cycles), and only the slice you need is ever disturbed.
Using this calculator well
- Enter principal, the bank's quoted annual rate, and tenure; keep compounding at quarterly for Indian bank FDs (corporate FDs and some NBFCs use annual or monthly — match the terms).
- Read maturity and interest; compute the effective yield for comparisons.
- Estimate post-tax yield: multiply the interest by (1 − your slab rate). Decide against debt funds/bonds on that number, not the headline rate.
- If the money may be needed early, price the ladder: three smaller FDs beat one big one almost every time.
Common mistakes
- Comparing banks on nominal rate when compounding differs — always use effective annual yield.
- Ignoring auto-renewal terms: matured FDs often roll over at whatever the current card rate is, sometimes for the same long tenure.
- Putting emergency funds in a single long FD — laddering or sweep-in accounts preserve both rate and access.
- Forgetting DICGC insurance caps at ₹5 lakh per depositor per bank (principal + interest) — split across banks for large sums, especially in small finance banks offering top rates.
- Overlooking senior-citizen bonuses (typically +0.25–0.50%) when parking a parent's funds.
Frequently asked questions
Glossary
- Cumulative FD
- Interest reinvested and paid with principal at maturity — full compounding.
- Non-cumulative FD
- Interest paid out periodically at a discounted rate; no compounding.
- Card rate
- The bank's published rate for each tenure bucket at booking time.
- Effective annual yield
- (1 + r/4)^4 − 1 — the true yearly return after quarterly compounding.
- TDS
- Tax deducted at source — 10% on FD interest past bank-level thresholds; adjustable in your return.
- Form 15G/15H
- Self-declarations to receive interest without TDS when income is below taxable limits.
- Laddering
- Splitting deposits across staggered maturities for liquidity and rate averaging.
- DICGC insurance
- Statutory deposit insurance of ₹5 lakh per depositor per bank.
- Sweep-in
- Auto-conversion between savings balance and FDs for liquidity with FD returns.
Key takeaways
An FD's maturity is knowable to the rupee: P(1+r/4)^(4t) for the cumulative quarterly standard. The rate is only half the outcome — choose cumulative unless you need income, ladder for liquidity instead of ever breaking a deposit, manage TDS with the right forms, respect the ₹5 lakh insurance cap per bank, and judge everything on post-tax effective yield.
Enter your deposit above to see the exact maturity — then split it into a 3-rung ladder and compare how little certainty you give up for year-round liquidity.