Fixed Deposit Calculator

What this calculator does

A fixed deposit is about the simplest way there is to grow money you do not need right now. You lock a sum away for a set time, the bank pays you interest, and at the end you get it all back, larger. The question is how much larger, and the answer depends on more than just the rate.

This calculator works out two figures: the total interest your deposit earns, and the maturity amount, which is your original money plus that interest. You choose how the interest compounds, from simple interest all the way to continuous compounding, and the result updates to match. The sections below show the math, a worked example, and the one setting that quietly makes a real difference to what you walk away with.

How to use it

1. Deposit amount. The sum you are placing in the fixed deposit.
2. Time period. How long the money stays locked in. Enter a number and pick the unit: years, months, or days.
3. Annual interest rate. The yearly rate the bank offers, as a percent.
4. Interest frequency. How often the interest is added to your balance: annually, semi-annually, quarterly, monthly, daily, or continuously. There is also a simple interest option, where interest is not compounded at all.

Press Calculate for the interest and the maturity amount, or Reset to clear it.

How the maturity amount is worked out

Which formula the calculator uses depends on the frequency you pick, so here are the three at work.

For simple interest, the interest is worked out on the original deposit only, and never on the interest itself:

A = P × (1 + r × t)

For compound interest, the interest earned gets added to the balance and then earns interest of its own. The number of times a year this happens is n, which is 4 for quarterly, 12 for monthly, and so on:

A = P × (1 + r ÷ n)^{n × t}

For continuous compounding, the idea is pushed to its limit, as if interest were added every instant. It uses Euler's number, e, which is about 2.718:

A = P × e^{r × t}

In each case P is your deposit, r is the annual rate written as a decimal, so 7 percent is 0.07, and t is the time in years. If you enter the period in months or days, the calculator converts it to years first. The interest you earn is simply the maturity amount A minus your deposit P.

A worked example you can check

Say you place 100,000 in a fixed deposit for 5 years at 7 percent, compounded quarterly. Let us run it.

• Compounding times a year: quarterly, so n = 4
• Total periods: 4 × 5 = 20
• Maturity amount: 100,000 × (1 + 0.07 ÷ 4)²⁰ = 141,477.82
• Interest earned: 141,477.82 minus 100,000 = 41,477.82

So your 100,000 grows to 141,477.82 over the five years, having earned 41,477.82 in interest. Now, what if you had chosen a different compounding frequency but kept everything else the same? That is where it gets interesting.

Why the compounding frequency changes your return

Here is something worth knowing before you compare deposits. Two banks can both advertise 7 percent, and still pay you different amounts, because of how often they compound. The rule is simple: the more often interest is added, the more you earn, because your interest starts earning interest sooner.

Take the same 100,000 at 7 percent for 5 years, and change only the frequency:

Look at the jump from simple to compound. Simple interest hands you 35,000, while compounding annually already lifts that to 40,255.17, and the frequencies above it keep nudging it higher. Notice too that the gains shrink as you go down the list. Moving from simple to annual is a big step, but moving from daily to continuous is barely a few units. Past a point, compounding more often gives you less and less extra. So when you compare fixed deposits, check the compounding frequency, not just the headline rate. A slightly lower rate that compounds monthly can beat a higher one that compounds yearly.

What your bank's figure might differ on

This calculator shows the full interest your deposit earns. In real life, a couple of things can sit between that figure and what actually lands in your account, and it is fair that you know them:

• Tax on the interest. In many countries the interest a fixed deposit earns is taxable income, and banks may deduct tax at source before paying you. So your take-home interest can be lower than the gross figure here.
• Breaking it early. Fixed deposits reward you for leaving the money untouched. Withdraw before the term ends and most banks apply a penalty or a reduced rate, so you would earn less than the full amount shown.

None of this changes the math of how your deposit grows. It just means the number here is the gross return, and your net can be a little lower. For the exact figure after tax and any conditions, your bank's own statement is the final word.

Questions people ask

What is the difference between simple and compound interest?

Simple interest is paid only on your original deposit. Compound interest is paid on your deposit and on the interest already earned, so it grows faster. For anything longer than a year, compounding makes a clear difference.

Is continuous compounding worth chasing?

Rarely on its own. As the table shows, once you are compounding daily, going to continuous adds almost nothing. It is more a mathematical limit than a meaningfully better deal.

Is a fixed deposit the same as a CD?

Effectively yes. A certificate of deposit, or CD, is the same idea under a different name: a sum locked in for a set term at a fixed rate. This calculator works for both.

Will my rate change during the term?

No. A fixed deposit fixes the rate for the whole term, which is the point of it. The rate you lock in is the rate you keep until maturity.

References

The compounding math, and the rule that more frequent compounding produces a larger future value, follows the treatment in OpenStax's Principles of Finance, which sets out how the rate and the number of periods behave as compounding moves from annual to quarterly, monthly, daily, and continuous.

1. OpenStax, Principles of Finance, Section 7.4, Applications of the Time Value of Money in Finance. https://openstax.org/books/principles-finance/pages/7-4-applications-of-tvm-in-finance