| Year | Interest | Total Amount |
|---|---|---|
| 1 | 3,600.00 | 53,600.00 |
| 2 | 3,600.00 | 57,200.00 |
| 3 | 3,600.00 | 60,800.00 |
| 4 | 3,600.00 | 64,400.00 |
| 5 | 3,600.00 | 68,000.00 |
Usually there are two ways to calculate FD interest: simple interest and compound interest.
Simple interest is calculated only on the principal amount, and compound interest is calculated on the principal plus accumulated interest. usually simple interest is used with The interest calculation method depends on the deposit tenure - FDs of 6 months or less, while those over 6 months mostly use compound interest.
The benefits include:
Different bank FD calculators use the same calculation formula (simple or compound interest). If the deposit amount, tenure and interest rate inputs are the same, the resulting maturity amount will be the same.
cumulative FDs keeps compounding until maturity, while in non-cumulative FDs, interest will be paid out periodically to the customer without reinvestment. Cumulative FDs provide higher returns to depositors.