What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a financial instrument offered by banks and financial institutions where you deposit a lump sum for a fixed tenure at a predetermined interest rate. FDs are considered one of the safest investment options as they offer guaranteed returns regardless of market conditions. The interest earned depends on the deposit amount, interest rate, tenure, and compounding frequency.
How FD interest is calculated
FD maturity is calculated using the compound interest formula: A = P × (1 + r/n)n×t, where P is the principal deposit, r is the annual interest rate (as a decimal), n is the compounding frequency per year, and t is the tenure in years. Most banks compound interest quarterly, which means your interest earns interest every three months.
Choosing the right FD tenure
The ideal FD tenure depends on your financial goals and liquidity needs. Longer tenures generally offer higher interest rates but lock your money for a longer period. Our comparison table helps you see how different tenures affect your returns, making it easier to choose the right balance between returns and accessibility.