Formulas and Examples to FD Interest Rates in 2020

FD interest rates in 2020 are showing a downward trend due to the tough economic conditions. Hence, it is important to lock-in the prevailing high rates before there is a further rate cut. 

However, to choose the right fixed deposit plan, you need to compare return on investment across various FD plans. There are various ways to calculate how much interest you are going to receive on a fixed deposit at the end of the maturity. Let us see how you can calculate FD interest rates in 2020.

Compound interest formula

You can calculate the return on your investment through compound interest formula. That is used in the banking and financing industry. The formula is a bit complex and can result in a long calculation. Here is an example of how the compound interest formula works to calculate fixed deposit rates. The formula is: 

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

where

‘A’ is maturity amount, ‘P’ is the principal amount, ‘r’ is the rate of interest, ‘t’ is number of years, and ‘n’ is compounded interest frequency

To understand this better, let’s consider an example. Suppose you are investing Rs. 1,00,000 in a fixed deposit for a tenor of 3 years at an interest rate of 8%, which is compounded annually (n=4). As per the formula provided, here’s the calculation you need to make:

A=100000*{[1+(0.08/4)]^(4*3)}

• A=100000*1.26824

• A=126824

Thus, your final amount is Rs. 1,26,824. 

Using the compound interest formula for calculating the returns on your fixed deposit can be complicated and tiring. In order to avoid the inconvenience of calculating manually, you can use online fixed deposit calculator which is easy to use. 

The online FD calculator from Bajaj Finance has various parameters, such as customer type, type of fixed deposit, investment amount and investment tenure. These are the parameters on which the interest rate and interest earnings depend. 

Here are some simple steps for using this online fixed deposit calculator:

• Choose your customer type

• Enter the investment amount

• Choose the investment tenure 

Upon entering these values, you can see the fixed deposit rates applicable on your investment and the returns you can earn. The online calculator will also show you the value of periodic interest payouts, in case you have opted for a non-cumulative FD.  Try changing the parameters to get the scheme that suits your investment plan. Bajaj Finance FD offers one of the highest fixed deposit rates in India, up to 7.35%.

Apart from saving the time and effort required to do manual calculations, there are various perks that you can get when you use an online FD calculator. 

• Comparing interest earnings for various time durations

When you calculate your return on your fixed deposit on an online fixed deposit calculator you can compare your maturity amount by increasing or decreasing the time duration in the calculator. 

• Choose from various payout options

There are various payout options that are available when you invest in a fixed deposit. You can choose a payout option that suits you better when you are calculating your return on investment through an online fixed deposit calculator it shows you the various options.

• Better planning

You can plan out your investment better when you are calculating your return on fixed deposit through a fixed deposit online calculator as it shows you various options for how long you want to invest and how you want to receive your return on investment. You don't have to go through a long company FD list to compare interest rates across financiers as most of the information you need is already available with the online FD calculator. 

Author Bio: