What is a Fixed Deposit (FD)?

A Fixed Deposit is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It is considered one of the safest investment options in India.

How FD Interest is Calculated?

Most banks in India use Quarterly Compounding for Fixed Deposits. This means the interest you earn in the first three months is added to your principal, and for the next three months, you earn interest on that new total.

The formula used is: A = P (1 + r/n) ^ (nt)
Where:
A = Maturity Amount | P = Principal Amount | r = Annual Interest Rate | n = Number of compounding periods per year (4 for quarterly) | t = Number of years.