1. What is the Compound Interest Formula?

The compound interest formula calculates the amount of interest earned on a fixed deposit where interest is compounded periodically. It provides a more accurate projection 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)
• \( R \) — Monthly interest rate (annual rate divided by 12)
• \( N \) — Number of compounding periods (months)
• \( A \) — Maturity amount

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 power of compounding over time.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How does HDFC FD compare to Axis Bank FD?
A: This calculator helps compare returns between HDFC and Axis Bank FDs by showing projected maturity amounts based on their respective interest rates.

Q2: What is the frequency of compounding?
A: Most bank FDs compound interest quarterly, but this calculator uses monthly compounding for more precise results.

Q3: Are there any 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 senior citizens).

Q4: Can I withdraw my FD early?
A: Premature withdrawals are typically allowed but may incur a penalty of 0.5-1% on the interest rate.

Q5: How accurate is this calculator?
A: It provides a close estimate, but actual returns may vary slightly due to rounding practices of individual banks.