For those thinking of investing in any of the many fixed deposit schemes available with the Canara Bank, an important step to check before parking their money is estimation. Canara Bank FD Calculator available on Paisabazaar.com serves this purpose perfectly in terms of calculation of estimated interest to be earned from investment in Canara Bank fixed deposits.
Let’s understand this in detail.
How to Use Canara Bank FD Calculator?
Rates for monthly payment option are discounted. The below-mentioned are the steps to be followed in order to use the FD calculator seamlessly:
Step 1: Go to Fixed Deposit Calculator at Paisabazaar.com.
Step 2: Enter the deposit amount.
Step 3: Enter deposit tenure, i.e. the period for which the FD should stay invested. Also, check for years or months from the drop-down list adjacent to the field.
Step 3: Check the current Canara Bank FD rates below and enter the applicable rate in the next blank space.
|FD Tenure||Canara Bank FD Interest Rates (p.a.)|
|Regular Citizens||Senior Citizens|
|7 days to 14 days*||4.25%||4.25%|
|46 days to 90 days||5.00%||5.00%|
|91 days to 179 days||5.00%||5.00%|
|180 days to less than 1 year||5.50%||6.00%|
|Above 1 year to less than 2 years||5.85%||6.35%|
|2 years & above to less than 3 years||5.85%||6.35%|
|3 years & above to less than 5 years||5.80%||6.30%|
|5 years & above to 10 years||5.80%||6.30%|
Step 4: Hit the Calculate button to check the estimated maturity amount as well as interest amount separately.
In the box below, calculated principal amount, maturity amount and interest amount shall be displayed.
Below is an example of how the calculator works:
For a customer who wishes to invest Rs. 5 lakh for 4 years and applicable Canara Bank FD interest rate of 7% (for example), the calculator shows the following results:
Maturity Amount: Rs. 6, 61, 026
Interest Amount: Rs. 1, 61, 026
Please note that the calculator currently computes compound interest on monthly basis.
Simple Interest vs. Compound Interest
Banks and other financial providers use either of the two methods for calculation of interest based on the choice of investor, viz. simple interest and compound interest.
Simple Interest is a method where interest calculation is calculated on the original deposit amount (principal). Here the interest remains the same in every cycle.
Formula for Simple Interest calculation:
SI = Principal (P) x Rate of Interest (R) x Tenure/Time (T)
Compound Interest is a method where interest is compounded or added to the original deposit amount. Here the first cycle constitutes computation on the original deposit amount and then every time the principal changes.
Formula for Compound Interest:
A = P (1+r/n) ^ (n * t)
Mr. X invests Rs. 5 lakh for 5 years @ 7% rate of interest (compounded quarterly). Mr. Y invests the same amount at the exact same tenure and ROI. Mr. X gets compounding of interest while Mr. Y goes for simple interest. Let’s see the difference in interest earned:
A = P (1+r/n) ^ (n * t)
= 7, 07, 389
Total Interest = Total Amount – Principal
= Rs. (7, 07, 289 – 5, 00, 000)
Total Interest = Rs. 2, 07, 389 (Compound Interest)
SI = P * R * T
= 5, 00, 000 * 0.07 * 5
= 1, 75, 000
Total Interest = Rs. 1, 75, 000 (Simple Interest)
Interest Payout vs. Interest Reinvestment
Interest Payout is one of the two options provided to investors when booking an FD. In this option, the interest earned is credited on monthly, quarterly, half-yearly or yearly basis, whichever chosen by the investor.
Suppose someone invests Rs. 3 lakh @ 5% ROI for 1 year, with monthly compounding, he/she will earn interest in the following frequencies:
|Rs. 1, 250||Rs. 3, 750||Rs. 15, 000|
Reinvestment of Interest means accumulation of interest till maturity and investing the earned interest again with the principal. This method brings larger returns. This option is best for working individuals who already have regular income flow whereas interest payout works well for those with an irregular income flow.
|Interest Accrued||Interest Paid|
|Rs. 1, 279||Rs. 3, 837||Rs. 15, 348|