How do FD calculators work?
Fixed Deposit or FD, is a type of term deposit which is generally offered by financial and non-banking financial companies. As compared to a savings account, fixed deposit provides a higher interest rate. Fixed deposits do not compromise on the safety of your interest and return earned on them. The interest that you receive of the FD is credited to your account, or it is reinvested. It depends on the plan you an opted for. However, the maturity of the fixed deposit is paid out at the end of the tenure.
FD calculators are another feature offered along with the account. This feature helps you to calculate your earnings based on the amount deposited and percentage of interest that the bank provides. We will take a look at these calculators in detail here.
How to use FD Calculator?
In order to use the FD calculator, you need to keep the following details handy:
- Amount deposited
- Rate of interest offered by a financial or non-banking financial institution
- Tenure of your account (in years/months, as applicable)
Once you fill in all of these details, you can calculate the amount which you expect to see at the end of your tenure. Apart from displaying the estimated amount, FD calculators also a detailed table which reflects the principal amount, maturity amount, and segregated interest amount earned.
Why should you use an FD Calculator?
Like every other financial decision, investing in an FD will also have an impact on your budget. In order to make your savings and spending work in coordination, FD calculators are essential. Many financial experts will advise you to use these calculators before you invest.
This will help you anticipate your finances every month and plan them for the future.
FD calculators also help to draw a comparison of the various types of FD schemes available in the market. They also help you to comprehend which financial institution is offering you a scheme that will support long-term goals.
Also, unlike other investments such as equity mutual funds, FDs offer you assured returns at a fixed rate of interest. Hence, it becomes easier to calculate the amount that you will receive at the end of your tenure.
Apart from this, here are some more benefits of using an FD calculator:
- There is no scope of errors as FD calculators are automatic calculators.
- You can carry out cumbersome calculations at multiple tenure, amounts, and rates at one time.
- FD calculators help save time and effort
- FD calculators are free of cost
- You can use it multiple times to compare returns for different combinations of FD rates, tenure and amount.
FD calculator is a helpful and straightforward tool; you can efficiently operate it and calculate your finances.