Is the interest on a fixed deposit compounded?

In India, usually quarterly, which is why the effective yield is slightly above the quoted rate. A deposit quoting 7% compounded quarterly yields 7.19% over a year.

What happens if I break a fixed deposit early?

The bank usually recalculates the interest at the rate that applied to the shorter period actually held, and applies a penalty of around half a percent to one percent. That can leave the effective return well below the headline rate, which this page does not model.

Finance & LoansdepositsIndia only

Fixed Deposit (FD) Calculator

Fixed deposit maturity value. Indian banks compound quarterly by convention, which makes the effective yield slightly higher than the quoted rate, the tool shows both.

Also called: fixed deposit calculator, fd maturity calculator, term deposit calculator.

Maturity value

₹7,10,873

₹7,10,873 at maturity. ₹2,10,873 of interest on a ₹5,00,000 deposit. The effective annual yield is 7.29%.

Interest earned

₹2,10,873

Effective annual yield

7.29%

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Quarterly compounding is the default because that is what Indian banks do; the quoted rate is nominal and the effective yield is higher. Interest on an FD is taxable as income in the year it accrues, not the year it is paid, which the tax-on-FD-interest calculator handles.

A = P * (1 + r/4)^(4t)

P: Deposit (currency)
r: Annual rate (decimal)
t: Years (years)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

5L at 7.1% quarterly for 5 years

Deposit amount: ₹5,00,000
Interest rate (per year): 7.1%
Tenure (years): 5
Compounded: Quarterly: the Indian bank standard

Maturity value₹7,10,873

independent computation of 500000 x (1+0.071/4)^20

Open this example

annual compounding is lower

Deposit amount: ₹5,00,000
Interest rate (per year): 7.1%
Tenure (years): 5
Compounded: Annually

Maturity value₹7,04,559

independent computation of 500000 x 1.071^5

Open this example

zero rate

Deposit amount: ₹5,00,000
Interest rate (per year): 0%
Tenure (years): 5
Compounded: Quarterly: the Indian bank standard

Maturity value₹5,00,000

degenerate case

Open this example

Method and limits

What it assumes

Interest is reinvested at the same rate until maturity (a cumulative FD).

What it deliberately does not model

TDS and income tax on the interest are not deducted here. See the FD TDS and tax-on-interest calculators.

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Is the interest on a fixed deposit compounded?: In India, usually quarterly, which is why the effective yield is slightly above the quoted rate. A deposit quoting 7% compounded quarterly yields 7.19% over a year.
What happens if I break a fixed deposit early?: The bank usually recalculates the interest at the rate that applied to the shorter period actually held, and applies a penalty of around half a percent to one percent. That can leave the effective return well below the headline rate, which this page does not model.