A term deposit is an ideal investment instrument for those looking for risk-free investment avenues. The interest rate offered by it is fixed and higher than the prices offered by a savings account.
It is also known as a fixed deposit since its tenor and interest rate remain constant. As the interest rate remains the same, you can calculate the returns before investing in a term deposit efficiently. Using a standard formula to calculate the returns can be complicated as different banks and financial institutions compound the interest differently.
Therefore, it is better to check the returns using a term deposit calculator that most banks and finance firms provide on their official website. It is easy to use an FD calculator because it uses software that does all the calculations automatically once you enter the necessary details.
Though the compounding formula used by financiers varies, the way to use them usually remains the same. Let us see how to use an FD calculator to calculate returns and interest earnings:
- Step 1: Firstly, you need to visit the official portal of the bank or finance company that offers an FD plan.
- Step 2: After visiting the portal, you need to find the FD calculator. It is usually provided in the page where calculators of different instruments are given.
- Step 3: Once you find the calculator, you will have to choose your customer type first.
- For example, if you plan to deposit in a Bajaj Finance FD, you will get a 0.10% additional interest rate if you are an existing customer and a 0.25% extra interest rate if you are a senior citizen. Therefore, choosing the correct customer type is essential as it will determine your final returns and interest earnings.
- Step 4: Now, enter some details like the amount that you want to invest, FD tenor, and FD type i.e., whether you are interested in cumulative or non-cumulative fixed deposit plans. Selecting the appropriate FD type is essential as the interest rates and calculation method will differ accordingly.
- Step 5: Once you enter all these details, the FD calculator will display your maturity amount along with interest earnings.
You can explore FD calculators of different banks and NBFCs to check the returns you can expect after depositing in one of their FD plans. The FD interest rate plays a vital role while estimating your interest earnings regardless of the FD interest rates calculator you are using.
Due to the ongoing economic slowdown and volatile market conditions, banks have reduced their interest rates. You can also invest in a tax saving FD to claim deductions up to Rs. 1.5 lakhs as per section 80C of the Income Tax Act, 1961, and gain more from the accrued interest on your deposited amount. However, some finance companies are still offering a high-interest rate on their FD plans.
For instance, Bajaj Finance offers up to 7.85% of interest rates for senior citizens and interest rates up to 7.60% for regular customers. Therefore, you can still grow your savings at a high-interest rate by choosing one of its FD plans. You can also check the FD calculator tool available on their website to compare interest rates and returns offered by different fixed deposit plans.
The option of depositing in multiple FDs using a single cheque allows you to invest in term deposits of different tenors and types. The tenor can be selected between 12 and 60 months as per your choice. By utilizing these features, you can ladder your investments and multiply your savings quickly. Also, you get a 0.10% special interest rate on renewing your FDs.
Moreover, you need not worry about your deposited amount as these fixed deposits have received FAAA/stable rating from CRISIL and MAAA (permanent) rating from ICRA. It means that your deposited amount is safe from market risks. You can start investing in an FD account conveniently by filling up an online FD form. Therefore, you need not step outside your house to invest in a fixed deposit.