How Fixed Deposit Interest and Maturity Are Calculated

Cumulative vs non-cumulative FD

A cumulative fixed deposit reinvests interest during the deposit term, so interest earns further interest according to the bank’s compounding convention. A non-cumulative deposit pays interest at a selected frequency such as monthly, quarterly, half-yearly or annually; the payout is not compounded in the same way inside the deposit.

How compounding works

For a simple illustration with a nominal annual rate compounded quarterly, the periodic rate is the annual rate divided by four. The maturity amount is principal × (1 + annual rate/4) raised to the number of quarters. Banks may apply their own day-count, leap-year, payout and rounding rules, so this simplified formula is not a substitute for the bank’s quote.

Steps to estimate maturity

Use the calculator as an initial comparison, then verify the bank’s deposit advice.

1. Enter the principal amount.
2. Select the deposit start date and maturity date or tenure.
3. Enter the applicable annual interest rate.
4. Choose the compounding or payout method that matches the product.
5. Compare estimated interest and maturity value with the bank’s disclosure.

Worked example

A hypothetical ₹1,00,000 cumulative deposit at 8% nominal annual interest, compounded quarterly for exactly two years, gives ₹1,00,000 × (1 + 0.08/4)^8, or approximately ₹1,17,166 before tax and bank-specific adjustments.

Tax and premature withdrawal

Interest from fixed deposits is generally taxable according to the depositor’s tax situation. TDS rules and thresholds can change, and TDS is not necessarily the final tax liability. Premature closure may reduce interest or incur a penalty. Check current bank terms and official tax guidance.