FD interest is compounded quarterly by most banks. The calculator shows both simple and compound interest for comparison.
FD Calculator — Common Questions
How is FD interest calculated?+
FD interest is calculated using compound interest formula: A = P(1 + r/n)^(nt), where P is principal, r is annual rate, n is compounding frequency, and t is tenure. Most banks compound quarterly (n=4). A ₹1 lakh FD at 7% for 5 years compounded quarterly gives ₹1,41,478 — interest of ₹41,478. Simple interest on the same FD would give only ₹35,000 in interest.
Which banks offer the highest FD rates in 2026?+
Small Finance Banks (SFBs) like Unity SFB, Suryoday SFB, and ESAF SFB typically offer the highest FD rates (8–9% p.a.) in India. Senior citizens get an additional 0.25–0.5% over regular rates at most banks. Large PSU banks (SBI, PNB) offer 6.5–7.5%. NBFCs like Bajaj Finance offer competitive rates. Always verify current rates directly with the bank as they change frequently.
Is FD interest taxable?+
Yes. FD interest is fully taxable as "Income from Other Sources" at your income tax slab rate. Banks deduct TDS at 10% if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). If you are in the 30% tax bracket, a 7% FD effectively earns only 4.9% after tax — making it a poor real return after 6% inflation. Tax-saving FDs (5-year lock-in) offer Section 80C deduction on the principal but interest remains taxable.
What is the difference between cumulative and non-cumulative FD?+
In a Cumulative FD, interest is compounded and paid at maturity along with the principal — ideal for wealth creation. In a Non-Cumulative FD, interest is paid out periodically (monthly, quarterly, or annually) — suitable for generating regular income, especially for retirees. Cumulative FDs always generate more total interest than non-cumulative FDs due to compounding, but non-cumulative FDs provide liquidity through periodic interest payouts.
Should I invest in FD or mutual fund SIP?+
For a 1–3 year horizon with capital protection need: FD is better. For 5+ year horizon with inflation-beating growth goal: equity SIP is significantly better. A 7% FD after 30% tax and 6% inflation gives a real return of approximately -1.1% (you actually lose purchasing power). An equity SIP averaging 12% after tax gives approximately 5–6% real return. Most financial advisors recommend FD for emergency funds and short-term goals, and SIP for long-term wealth creation.