Question 1

How is FD maturity value calculated?

Accepted Answer

Fixed deposits use compound interest: M = P × (1 + r/n)^(n·t), where P is the principal, r is the annual rate, n is the number of times interest compounds per year (quarterly for most banks, so n = 4), and t is the tenure in years. The more frequent the compounding, the higher the maturity value for the same headline rate.

Question 2

Does an FD beat inflation?

Accepted Answer

Often only barely, and sometimes not at all after tax. If your FD pays 7% while inflation runs 6%, your return after inflation is only about 0.9%, and if FD interest is taxed at your income slab, that can turn negative. This calculator shows the maturity value in today's money, so you see the real growth, not just the headline interest.

Question 3

Is FD interest taxable?

Accepted Answer

In India, FD interest is fully taxable at your income-tax slab rate, and banks deduct TDS once annual interest crosses ₹40,000 (₹50,000 for senior citizens). In the US, CD interest is taxed as ordinary income. The maturity value shown here is before tax, so factor in your tax rate to get the net return, which matters most for higher-rate taxpayers.

Question 4

What compounding frequency do banks use?

Accepted Answer

Most banks compound fixed deposits quarterly, which is the default here. Some offer monthly or half-yearly compounding, and a few pay simple interest on very short tenures. Switching from annual to quarterly compounding on a 7% 5-year FD adds a meaningful amount to the maturity value, so it's worth confirming with your bank.

Fixed Deposit (FD) Calculator

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Real-World Examples

A 5-year FD at 7%, compounded quarterly

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