1. What is the Compound Interest Formula?

The compound interest formula calculates the amount of interest earned on a fixed deposit where the interest is compounded monthly. It provides a more accurate assessment of returns compared to simple interest calculations.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( P \) — Principal amount (initial investment in INR)
• \( R \) — Monthly interest rate (annual rate divided by 12, as a decimal)
• \( N \) — Number of compounding periods (months)
• \( A \) — Final amount including interest (INR)

Explanation: The formula accounts for the compounding effect where interest is earned on both the principal and accumulated interest.

3. Importance of Fixed Deposit Calculation

Details: Accurate fixed deposit calculations are crucial for financial planning, comparing investment options, and understanding the power of compounding over time.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate in percentage, and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest compounded in HDFC fixed deposits?
A: HDFC typically compounds interest quarterly, but this calculator assumes monthly compounding for more precise results.

Q2: What are current HDFC FD interest rates?
A: Rates vary by tenure and customer type (general/senior citizen). Check HDFC's official website for current rates.

Q3: Are there tax implications on FD interest?
A: Yes, interest income is taxable as per your income tax slab. TDS is deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens).

Q4: What's the minimum deposit amount for HDFC FDs?
A: Typically ₹5,000 for regular FDs, though amounts may vary for special schemes.

Q5: Can I withdraw my FD before maturity?
A: Yes, but premature withdrawals usually attract a penalty of 0.5-1% on the interest rate.