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 for longer-term investments.

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)
• \( A \) — Final amount including interest

Explanation: The formula accounts for interest being earned on both the initial principal and the accumulated interest from previous periods.

3. Importance of FD Interest Calculation

Details: Accurate interest calculation helps investors compare different FD options, plan their finances, and understand the power of compounding over time.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: 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 before investing.

Q2: How often is interest compounded in HDFC FDs?
A: HDFC typically compounds interest quarterly, but this calculator assumes monthly compounding for more precise results.

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

Q4: What's the difference between cumulative and non-cumulative FDs?
A: Cumulative FDs compound interest and pay at maturity, while non-cumulative FDs pay interest periodically (monthly/quarterly/etc.).

Q5: Can I break my HDFC FD prematurely?
A: Yes, but it may attract a penalty (typically 0.5-1% lower interest rate) and the interest may be calculated as simple interest.