Quick Answer
Fixed Deposit (FD) maturity value is calculated using the compound interest formula: Maturity = P × (1 + r/n)^(n×t), where P is the deposit amount, r is the annual interest rate, n is the compounding frequency, and t is the tenure in years.
What Is FD Calculator?
A Fixed Deposit (FD), also called a Term Deposit in some countries, is a savings product offered by banks where you deposit a lump sum for a fixed period at a guaranteed interest rate, in exchange for agreeing not to withdraw the funds early. In return for this commitment, banks typically offer a higher interest rate on FDs than on regular savings accounts.
FD interest is almost always compounded, most commonly quarterly or annually, depending on the bank, meaning the interest earned in one period is added to the principal before calculating interest for the next period. This makes the actual return higher than what a simple-interest calculation would suggest, especially for longer tenures.
FDs are popular for their predictability: the interest rate is locked in at the time of deposit and doesn't change with market fluctuations, unlike many other investments. This makes them attractive for risk-averse savers, but it also means FD returns can lag behind inflation during high-inflation periods, since the rate is fixed regardless of how prices rise.
How to Use
- 1Enter the deposit amount (principal).
- 2Enter the annual interest rate offered by the bank.
- 3Select the compounding frequency (quarterly is most common for FDs).
- 4Enter the deposit tenure in months or years.
- 5The calculator returns the maturity amount and total interest earned.
Formula
Maturity = P × (1 + r/n)^(n×t)P = principal, r = annual rate, n = compounding frequency per year, t = years
Interest = Maturity − PExample: PKR 500,000 FD at 13% annual interest, compounded quarterly, for 2 years
- P = 500,000, r = 0.13, n = 4 (quarterly), t = 2
- Maturity = 500,000 × (1 + 0.13/4)^(4×2)
- Maturity = 500,000 × (1.0325)^8
- Maturity ≈ 645,860
Tips & Things to Know
- Breaking an FD before maturity usually triggers a penalty, typically a reduced interest rate for the period the money was actually held, so only commit funds you won't need during the tenure.
- Compare the compounding frequency across banks, not just the headline rate, a slightly lower rate with more frequent compounding can sometimes yield a similar or better return than a higher rate compounded less often.
- FD interest is generally taxable as income in most countries, factor this into your real (after-tax) return when comparing FDs to other investment options.
- Laddering FDs (splitting funds across multiple FDs with staggered maturity dates) can provide periodic liquidity while still earning FD-level interest on most of your funds.