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

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

3. Importance of FD Calculation

Details: Accurate FD return calculation is crucial for financial planning, comparing different investment options, and understanding the power of compounding.

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 does HDFC FD compare to ICICI FD?
A: Both banks offer competitive rates, but actual returns depend on the specific tenure and amount. This calculator helps compare potential returns.

Q2: What are current HDFC FD rates?
A: Rates vary by tenure (typically 3-7% for general public, higher for seniors). Check HDFC's website for current rates before investing.

Q3: Is the interest compounded quarterly or monthly?
A: This calculator assumes monthly compounding, which is common for most bank FDs in India.

Q4: Are there tax implications?
A: Yes, FD interest is taxable as per your income tax slab. TDS may be deducted if interest exceeds ₹40,000 (₹50,000 for seniors).

Q5: What's the difference between cumulative and non-cumulative FDs?
A: Cumulative FDs compound interest (as calculated here), while non-cumulative FDs pay out interest periodically.