123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Investing---Finance >> View Article

Different Modes Of Interest Calculation In A Fixed Deposit

Profile Picture
By Author: Neha Sharma
Total Articles: 241
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

"Fixed Deposits are one of the most popular investments for people to make. Now with the digital revolution, booking a fixed deposit online is very convenient and can be done even with your mobile phone.

While booking a fixed deposit, one of the things that needs to be considered is the type of interest calculation on the principal amount. Depending on the type of interest calculation, the final outstanding amount will change.

One way to find out the total interest on your fixed deposit and the interest under different alternatives is to use an FD interest calculator. A fixed deposit calculator will calculate the total interest earned for a given set of conditions of a fixed deposit. You need to input the principal amount, the period of the fixed deposit and the type of interest and the FD calculator will show the rate of interest and the total interest payable. This can help you plan and make decisions about the FD tenure and the amount to be invested.

Different modes of interest calculation:

1. Cumulative:
This is the most common type of interest calculation on a fixed deposit. In this type, the interest is calculated quarterly and added to the principal amount. For the following quarter, interest is compounded i.e it is calculated on the principal outstanding and the interest credited for the earlier quarter. The interest earned is highest under this option.

2. Quarterly payout:
Under this type, interest is calculated at the end of every quarter and paid out to the savings account linked with the fixed deposit. This is one way to ensure some income from the fixed deposit.

3. Monthly payout:
Under this type, interest is calculated at the end of every quarter and paid into the savings account linked with the FD on a fixed day every month. This option is generally preferred by senior citizens who need regular and consistent income.

4. Simple interest for Short term FDs:
For fixed deposits of a very short duration, banks generally calculate interest on a simple interest basis. Even for fixed deposits longer than a quarter but less than 6 months, interest is calculated for the entire tenure of the deposit on a simple interest basis.

Using a fixed deposit calculator is both simple and free. With it, you can plan your investments so that you get the maximum income from your investments.


Author Bio:- Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching about FD calculator. Through her work, she has explained different modes of FD interest calculation

Total Views: 48Word Count: 423See All articles From Author

Add Comment

Investing / Finance Articles

1. Hire Wealth Management Firms To Seamlessly Manage Profits
Author: Avendus Group

2. Top Reasons Why Real Estate Investors Swear By Hard Money Loans
Author: Chris Goulart

3. How Are Equity Funds Categorised?
Author: Shashank Bhaskar

4. Advantages And Disadvantages Of Multiple Savings Account
Author: Shashank Bhaskar

5. Pune: A New Hub Of Real Estate Development
Author: Pooja Agrawal

6. Buy Bitcoin In Greece
Author: Leonard Quinn

7. Investment Banking A Dynamic Yet Challenging Sector For Future
Author: Avendus Group

8. 1031 Exchange - A Way To Save Your Taxes
Author: Amelia

9. Top 5 Reasons To Choose Zerodha For Trading
Author: Gunjan Chokshi

10. 4 Types Of Nri Accounts You Can Open In India
Author: Rishank Rautela

11. Top 3 Flexible Benefits That Unit Linked Insurance Plans Offer!
Author: Unit Linked

12. The Secret Of Taking Cheap Winter Holidays In Australia
Author: john

13. Home Loan Emi Calculators Explained Through Faq's
Author: Rudra Raghavan

14. Home Loans For The Self-employed Professionals!
Author: Anil Patel

15. Why Taking Loan Against Property A Popular Way Of Taking Loans
Author: Finway Capital

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: