Here's How to Use an Online FD Calculator in 5 Steps
Aug 07, 2020 05:12
Are you wondering which short-term investment plan is the right choice for investing? A simple solution to this are Fixed Deposits (FD). They are one of the most preferred investment instruments as they offer guaranteed returns at a fixed rate of interest.
All banks provide FDs at different rates of interests (ROI) which are decided by them. This interest can help you choose which FD to select for investment purpose, this is also made more convenient nowadays with many banks offering online FD calculators.
What are FD Calculators?
It is an online tool with which you can calculate the approximate interest you can earn by investing in an FD. The initial investment amount is calculated with simple interest. Further, the principal and subsequent amount are calculated based on the offered compound interest. After providing the following specific information, the return value at maturity of the FD account can be easily calculated:
•Type of FD scheme
•ROI offered by the bank
It is advisable to use an FD calculator to know the value of your investment before applying for one.
Why use FD Calculator?
Calculating the rate of interest using an FD calculator will help you plan your investments in a better manner. Also, it helps in renewing the deposits . Also, the rate of interest is fixed for the entire tenure. Renewals of deposits are done at the prevailing rate of interest at maturity. Further, the FD calculator helps you decide whether you should continue with the same scheme or switch to another.
How to calculate interest using an FD calculator?
The process of calculating the fixed deposit rate of interest becomes comfortable with the use of FD calculator. If your bank provides the FD calculator facility, then visit its official website and follow these simple steps:
1.New Customer, Existing Customer, Senior Citizen - choose your customer type from these options
2.Select the type of fixed deposit from cumulative or non-cumulative choice
3.Select the amount to be invested
4.Enter FD tenure
After this information has been submitted, the FD calculator will automatically suggest the rate of interest which will be earned. Along with that, it also tells you about the maturity amount during the given tenure.
Factors to be Considered While Using the FD Calculator
Before calculating the rate of interest on different FDs using the calculator, you should consider the following factors:
It is the amount you need to open an FD account. A significant advantage of fixed deposits is that you can invest with a minimum amount of Rs. 1,000 as well.
Different financial institutions offer different rates of interests for FDs. Depending upon the fixed deposit account tenure, the rate may vary from one bank to another.
It is based on the tenure that you choose for investing your money. However, a minimum tenure of 7 to 10 years is ideal for investing in FDs.
•Frequency of Compound Interest
FD calculators calculate the maturity amount to be earned at the end of the tenure. Monthly, quarterly, half-yearly or annual basis, you can select the period that is most suitable for you.
Keeping your money in an FD, to let it grow. However, it is imperative to research first and choose a bank to open your account. Another advantage is that fixed deposits are not market-linked. Hence, the volatility of the market does not influence it.
However, the deciding factor should be the rate of interest that you will get in return. Reputable banks like Axis Bank provide you with an FD calculator, helping you reach a decision. Also, they offer lucrative rates of interest on their fixed deposit schemes. Choose fixed deposits as they are one of the best options to start your investment journey.
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