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 added to the principal at regular intervals, resulting in interest being earned on interest.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount (INR)
• \( P \) — Principal amount (INR)
• \( R \) — Periodic interest rate (annual rate divided by compounding periods per year)
• \( N \) — Total number of compounding periods (years × periods per year)

Explanation: The formula accounts for the exponential growth of your investment as interest is compounded over time.

3. Importance of FD Interest Calculation

Details: Understanding how your fixed deposit grows helps in financial planning, comparing different FD options, and maximizing returns on your investments.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate in percentage, tenure in years, and select compounding frequency. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest.

Q2: How often does HDFC compound FD interest?
A: HDFC typically offers monthly, quarterly, and annual compounding options for fixed deposits.

Q3: Are FD interest rates fixed for the entire tenure?
A: Yes, the interest rate is fixed at the time of FD booking and remains constant throughout the tenure.

Q4: Is the interest earned on FD taxable?
A: Yes, interest earned on FDs is taxable as per your income tax slab. TDS may be deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens).

Q5: Can I withdraw my FD before maturity?
A: Yes, but premature withdrawal may attract a penalty and the interest rate may be reduced.