Creating an FD is a simple task these days. You can go to the website of the lender and fill out the online form along with various other details. However, to know the exact amount of maturity is a different thing. Investors usually find it comfortable if someone can confirm to them the exact interest they will earn for the chosen tenor and the final maturity amount. Online FD interest rate calculators can come to your rescue for this purpose.
How interest calculation works
The interest rate calculation is a function of the tenor you have chosen, the type of customer you are (new, returning and others) and the payout you have chosen. The principal you have chosen will also determine your returns. An online FD calculator will require you to input all these factors and give you an instant interest calculation along with the maturity amount.
First, let us look at how each of these factors is important in the interest rate calculation.
- Interest Rate
You can receive the highest interest rates with Corporate Fixed Deposit like Bajaj Finance FD. While banks offer 6.5% – 7.5% at the highest tenor, company FDs are known to easily provide 1-2% higher. Choose a company like Bajaj Finance which offers 8.65% for a 5 year FD.
- Tenor
With an FD, after interest rate, the tenor matters the most as changing the tenor can drastically change your returns. An online FD interest rate calculator will easily show you the difference. The higher the tenor, the higher the interest rate will be.
- Interest Payout
There are two kinds of interest payouts available as in investor –
- Cumulative – Under this option interest can be calculated annually but is paid on maturity. This is useful when you do not have a need for intermittent payments. A lump sum payment allows the interest to be added back to the existing principal and the remaining interest is calculated on the new principal. Thus, this way maximum interest can be earned.
- Non-cumulative – Or you can go for another option which allows you to get an interest payout at periodic intervals – monthly, quarterly and half-yearly. This is a suitable option for people looking for payments for meeting expenses or adding to an investment fund. The interest earned here is a little less than in the first option as the interest is paid out rather than reinvested.
Online FD Interest Rate Calculator
NBFCs like Bajaj Finance provide a simple to use online FD Maturity amount Calculator which can be accessed on its website. You need to follow these steps –
- Choose the type of customer category you fall in – New, Returning, Senior Citizen, Employee – this will determine your rate of interest. New customers can get rates starting from 7.72% for a monthly non-cumulative FD for 12-23 months. This increases to 8.6% if you go for a 36-month cumulative FD. Senior citizens enjoy an additional 0.35% interest rate. Employees of Bajaj and existing customers receive and an additional 0.25% for creating an FD.
- Choose whether you want to create a cumulative or non-cumulative FD
- Enter your principal amount for creating the FD
- Select the tenor of investment
- You will automatically see the interest earnings and total maturity amount due at the time of maturity.
Making a decision
Interest rate changes in accordance with the maturity amount and you can decide if you want to keep the principal for a longer time. If you need to multiply your money more quickly, then you can go for a higher principal.
