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 periodically. It provides a more accurate calculation than simple interest, especially for longer tenures.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount (INR)
• \( P \) — Principal amount (INR)
• \( R \) — Monthly interest rate (annual rate / 12, as a decimal)
• \( N \) — Number of compounding periods (months)

Explanation: The formula accounts for interest being earned on both the principal and accumulated interest, leading to exponential growth.

3. Importance of FD Interest Calculation

Details: Accurate interest calculation helps in financial planning, comparing different FD schemes, and understanding the actual returns on your investment.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How does HDFC FD compare with SBI FD?
A: HDFC generally offers competitive rates comparable to SBI, but rates vary based on tenure and current bank policies.

Q2: Is the interest compounded quarterly or monthly?
A: Most banks compound interest quarterly, but this calculator assumes monthly compounding for more precise results.

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

Q4: What is the minimum tenure for HDFC FDs?
A: Typically 7 days for regular FDs, but higher tenures usually offer better interest rates.

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.