Interest on FD: An Assured Source of Income
No matter how the economy changes, investors continue to choose Fixed Deposits as a means of savings and investment. This can be attributed to the fact that Fixed Deposits combine returns with safety.
This makes them a favourite across diverse class of investors. You can open a Fixed Deposit with a bank or NBFC.
The key Features of FDs
- A choice of tenure ranging from 6 months to 10 years, offering you the facility to ladder your FD investments. You will have funds in hand when you need them the most.
- Fixed Deposits offer guaranteed returns. Despite markets displaying a yo-yo trend of inflation rates moving northwards, you earn the interest on FD. Of course, the real rate of return on FD would decrease, in an inflationary market.
- Interest on FD can be withdrawn monthly, quarterly or annually, as per the preference of the depositor. FD interest rates calculator can be employed to crystallize the interest income as well as the maturity amount.
- Fixed Deposits offer the benefit of compounding. The interest that is earned on the income can be reinvested. Usually, banks compound at quarterly intervals.
- Loan can be availed against the Fixed Deposits. You can use these Fixed Deposits as collateral and take a loan, not exceeding the FD’s maturity value.
- Fixed Deposits also offer partial/full withdrawal facility. In which case, you will have to pay a penalty in the form of lower return. Usually 1% is reduced from the original interest rate of FD if you choose to withdraw the FD.
- Fixed Deposits held with banks are covered by Deposit Insurance up to Rs. 1 lakh. If you hold deposits with multiple banks, the cover is extended to deposits with all banks.
Calculating Interest on FD
Let’s say you’ve made a sizeable FD investment, and intend to use the interest income to meet your monthly expenses. You can choose to have a 
monthly interest payout by selecting the option in the FD application form.
Generally, the monthly payout option is preferred by the retired community. They usually park their gratuity and retirement benefits in an FD to earn a safe and steady income.
An FD monthly interest calculator will ease the mathematics of calculating interest monthly. Let’s say you’ve decided to open Fixed Deposits for earmarked purposes.
Then, you can use an FD interest rate calculator excel sheet to keep track of multiple FDs, their interest and maturities. As you know, higher the compounding interest greater will be your return from the FD investment.
Though the norms are that banks offer quarterly compounding, you can request for interest to paid out at monthly rests. Banks in such case, make use of FD calculator monthly interest payout to credit the interest on FD to your savings bank account.
You can hold an FD with new banks which offer a higher interest rate or an NBFC, which enjoys a good credit rating.
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