How to Use a Fixed Deposit


A fixed deposit is a convenient form of investment option. If you have a lump sum of money, it can be invested in the form of a fixed deposit in a very efficient manner. The greatest advantage with a fixed deposit is that it will have a fixed rate of interest throughout the tenure. The interest rate committed by the bank at the time of creation of the deposit will be paid without any issues. Banks will revise the interest rates at regular intervals and the change in interest rate will affect your earnings.

Comparison Of Fixed Deposits

By using the fixed deposit calculator, you can find out the earnings you make with a fixed deposit. It is also possible to compare the earnings between two deposits of different tenures. It will help you create the best deposit as per your needs.

The following factors will affect the returns of a fixed deposit:

  • Principal amount
  • Rate of interest
  • Tenure (duration of the deposit)
  • Financial Institution Money Policy
  • Recession
  • Inflation

  • Generally, the rate of interest will increase with the increase in tenure. Some banks stipulate the minimum amount to create an online FD. For senior citizens, banks offer additional interest of 0.5%. If the customer’s age is above 60 years, the senior citizen option can be exercised and there will be higher returns.

    What is a FD Deposit Calculator?

    The fixed deposit calculator is an online financial tool, which helps calculate the maturity returns as per the interest rate applied for the deposit. The FD calculator is similar to a calculator. You will want to enter the values in respective fields to find out the returns as per the tenure.

    The most common fields in the calculator are deposit amount, interest rate and tenure. The tenure can be either days, weeks, months or years. The results are displayed on the screen instantly.

    Benefits of the FD calculator?

  • Available online
  • Easy to use
  • Delivers instant results
  • Influences your FD amount
  • Helps you understand the tax-saving potential

  • Monthly returns on FD

    The returns from a fixed deposit can be obtained on monthly basis. If you opt for FD with monthly returns, you can find out the monthly returns by using fixed deposit calculator. The fixed deposit as the name implies is not linked to market rates. The interest rate will not change as it happens with other instruments such as mutual funds and shares. The rate of interest on fixed deposits is higher than savings account or current account. You can open a fixed deposit with minimum documentation, with very low minimum and there is no maximum cap in the deposit. If you choose monthly payment mode, the interest will be paid by the bank on monthly basis. There will not be any change in the principal amount. After the end of the term, the principal amount will be credited to your savings account. It is possible to renew the policy automatically after the end of the tenure. If you create an online fixed deposit, the auto renewal option can be selected.

    Benefits For Senior Citizens

    Senior citizens will be able to make the most of fixed deposits as it will be a regular source of income for them.

    Type Of Interest Payment

    Interest amount on deposits will be paid by the bank by calculating either the simple interest or compound interest. To understand the difference in returns, you can use the Fixed Deposit Calculator.

    1. 1- The simple interest will be calculated by multiplying the principal amount with the rate of interest and the duration.
    2. 2- The compound interest is the interest earned on the principal as well as the interest earned on the interest. Hence, the returns obtained on a fixed deposit with compound interest calculation will be higher than the returns earned on a deposit with simple interest calculation.

    Planning Your Investment

    If you have decided to invest in fixed deposits, you should choose the most appropriate kind of fixed deposit that can fulfill your requirements. To get monthly payout on a fixed deposit, you should create a fixed deposit of a minimum amount as stipulated by the bank. You should be aware of the inflation as it will impact your earnings. Fixed deposits offer highest level of safety and security. The principal amount is guaranteed and the interest amount will be paid by the bank as per the terms and conditions of the fixed deposit certificate. Even though the bank suffers financial loss, it is bound to pay the principal plus interest to the depositor without fail.

    Comparison Of Interest Rates

    1. 1- The interest rates on savings account, fixed deposits and recurring deposits vary from one bank to another bank. Hence, you can look around for the best product by going through the FD calculator presented on the official website.
    2. 2- You can also go through the information presented on the official website to understand the returns and the terms and conditions. After comparing the features and returns, you can create the FD from a bank as per your convenience.
    3. 3- You should get best service from the bank. The net-banking platform should be free from technical glitches so that the creation and closure of fixed deposit will be seamless.
    4. 4- Some banks will not deduct TDS on the interest earned on fixed deposits. Thus, you should compare services and returns to settle for the best financial product.


    Savings will grow in a sustained manner by choosing fixed deposits. With the advent of online banking facility, the fixed deposit can be created very easily and the account can be closed as per the financial need of the customer. There are tax-saving deposits which help in the protection of the principal and will help depositors to get monthly returns without any difficulty.

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    About the Author

    Christopher Smith

    Christopher is an adventure aficionado and freelance blogger. He loves traveling and writing.

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