A term deposit is a popular investment option which is held at a bank or financial institution. In a term deposit, your money is invested for a specified rate of interest over a fixed amount of tenure. When you invest your money into a term deposit, your money stays with the bank or financial institution for the specified period which usually ranges from 7 days to 10 years and the rate of interest is guaranteed not to change for that pre-determined time period. You can withdraw your money only at the end of the term deposit tenure or earlier by paying a penalty.
Term Deposit is popular among investors who prefer to invest in a risk free investment. One of the major advantages of investing in a term deposit is that you will be able to earn fixed returns over a specified period of time with no risk involved. Many investors also use term deposits as a part of their investment mix. A term deposit comes with various benefits such as guaranteed returns, low risk, higher rate of interest than savings account, loan facility and higher interest rates for senior citizens among many others. Term deposits are offered by all leading banks in India such as ICICI Bank, State Bank of India, HDFC Bank, IDBI Bank, Yes Bank, Kotak Mahindra Bank, IndusInd Bank, Axis Bank and many others.
Types of Term Deposits
Banks and financial institutions usually offer the following types of term deposits:
What is a Fixed Deposit?
Fixed Deposit is a type of term deposit which is provided by banks and financial institution and usually ranges from 7 days to 10 years. Individuals who desire to invest their hard earned money in fixed deposit can do so by selecting tenure and depositing the amount in one go. Fixed Deposit offer higher interest rates than savings account and the interest on the principal is credited on a monthly or quarterly basis. Once the money is kept for the specified period, you will get the maturity amount which will include your principal amount with interest. You can also withdraw the amount before maturity, but you will be required to pay a penalty on your fixed deposit. To calculate the interest that you will be able to earn on your fixed deposit on maturity, you can use a FD calculator.
How to calculate interest on Fixed Deposit?
Calculating fixed deposit interest rate manually is a time taking process and is prone to human errors. Calculating interest on FD calculator is easy, user friendly and saves time by providing the results in seconds. You can calculate interest on your fixed deposit by providing the following details:
- Deposit Amount – It is the amount that you invest in a fixed deposit for a specified period of time. The minimum and maximum amount in a fixed deposit varies from one bank to another and the investment can be made only once. This means you need to invest the total amount in one go.
- Rate of Interest – It is the rate of interest offered on your deposit amount. Rate of interest also varies with the deposit amount and tenure.
- Fixed Deposit Tenure – Fixed Deposit tenure is the pre-determined tenure for which investment is made. Fixed Deposit tenure usually ranges between 7 days and 10 years.
By providing these details, you can know about the maturity amount and potential interest instantly.
What is a Recurring Deposit?
Recurring Deposit is another type of term deposit which usually ranges from 6 months to 10 years depending on your bank or financial institution. Recurring Deposit is for those individuals who do not want to invest their savings in one go. Recurring Deposit allows individuals to invest a fixed amount of money every month and earn interest on a monthly basis. The interest earned on your recurring deposit is paid along with the principal amount at maturity. Usually, banks and financial institutions offer the same interest rates on recurring deposit as on fixed deposits. Recurring deposit interest remains the same throughout the recurring deposit tenure. You can easily calculate your interest and earnings on your recurring deposit using a RD calculator.
How to calculate interest on Recurring Deposit?
Calculating recurring deposit interest manually is a time taking process. So, individuals looking to invest their money in recurring deposits can use a recurring deposit calculator to calculate their interest and earnings. A recurring deposit calculator works same as a FD calculator but calculates interest on a monthly basis. Just like a fixed deposit calculator, you are required to provide your monthly deposit amount, rate of interest and recurring deposit tenure to calculate your recurring deposit interest and earnings in seconds.
Why is it important to use a Term Deposit Calculator?
Calculating interest using a fixed deposit calculator or RD calculator is an easy process, which helps you to calculate your interest and earnings without any complex calculations. To calculate total interest earned and returns on your investment, you just need to provide 3 parameters into the tool and get instant and accurate results. Just provide deposit amount, interest rate and tenure and click on the ‘Calculate’ button in the tool. Not only this, a RD or FD calculator can also provide you the following benefits:
- Ease of Usage
A term deposit calculator is easy to use and provide instant and accurate results. You are just required to enter few details including deposit amount, tenure, interest rate etc. to get you the desired results in no time.
- Quick Calculation
Manual calculations can take time, but a term deposit calculator can perform all the calculations instantly.
- Deposit Specific
There are deposit specific calculators available online. So, whether it is a fixed deposit or recurring deposit, you will be able to find a RD or FD interest calculator without any difficulty.
- Always Available
With a term deposit calculator you are no longer required to make those laborious calculations. You can easily calculate interest and earnings on your term deposit using an online calculator anytime.
- Offers 100% Accuracy & Instant Calculations
With a term deposit calculator, you are only required to provide the correct details and you are good to go. Calculating interest can be a difficult task for individuals looking to invest in a term deposit. But, with a term deposit calculator you get 100% accurate results instantly.