According to the statistical returns by the Reserve Bank of India, fixed deposits contributed 57.7% of the total deposits in the financial year 2017-18. The ever-rising popularity of fixed deposits in India has created an avenue for financial institutions to make the investment procedure even more helpful.
Such financial tools help individuals determine the interest pay-out and maturity amount for a particular investment, which aid in customers planning their finances. Customers can check for various fixed deposit calculator and find the most useful one that helps them calculate returns on investment.
Most financial institutions offer customers to use their FD calculator so that they can –
- Achieve transparency in the calculation process.
- Know how interest pay-out and maturity amount is calculated.
- Tweak tenor to see changes in the interest rate and opt for a plan that offers highest fixed deposit interest rates.
Subsequently, investors looking for the best deposit calculator should make sure of certain pointers as mentioned below.
How to choose the best deposit calculator online?
- Choose the one that offers calculation for both types of FD
Customers often struggle to find the answer to cumulative vs. non-cumulative fixed deposit which is better. In this regard, the FD calculator will help them calculate the interest pay-out under different situations. In case one is opting for a non-cumulative FD, they can calculate the interest pay-out for interest compounded periodically using it. Hence, making sure the calculator works for both kinds of a term deposit will ensure they get to compare which one is better.
- Tweaking tenor to see the value of interest
Several fixed deposit calculators let users tweak the value of tenor while calculating and provide values of interest and maturity amount accordingly. While changing the value of tenor, users will observe a change in the applicable rate of interest as well.
This is because FD tenor affects its interest rate. For longer tenors, the applicable rate of interest is higher, and for shorter tenor, it is low. Consequently, choosing a calculator that makes the process transparent by showing the changes in interest rate with changes in tenor will be useful.
- Select one that uses the right formula for calculation and crosscheck
Even though it is highly unlikely that a deposit calculator isn’t using the right formula, customers will be better protected and financially informed by cross-checking calculation themselves.
Fixed deposit calculators use two different formulas depending upon one they need as per customer’s investment enquiry.
- Simple interest formula
It is used when interest needs to be calculated on the principal amount only and not on the earned interest. Hence, calculations for a non-cumulative type of FD generally use this formula.
Simple interest = (P x r x t)/ 100.
Where,
- P is principal amount or amount of deposit.
- r is the rate of interest.
- t is tenor of deposit.
The maturity amount hence calculated will be the sum of simple interest and principal amount.
- Compound interest formula
This is used for a cumulative type of fixed deposit account where the interest earned is added with the principal amount for tenor and then interest is calculated over it. Investors can cross-check calculations with this formula mentioned below.
A = P x [(1 + r/n) ^ (n x t)]
Where,
- A is maturity amount.
- P is principal amount or amount of deposit.
- r is the rate of interest.
- n is compounding frequency.
- t is tenor of deposit.
The interest pay-out, in this case, can be determined by subtracting the principal amount from the maturity amount.
Cross-checking calculation will be easier with these formulas and will be helpful in choosing a feasible calculator.
- Choose a deposit calculator from a reliable source
Fixed deposit calculators offered by reputed financial companies are the most feasible choice for customers planning to invest money.
Fixed Deposit offered by Bajaj Finance not only come with attractive interest rates but also provide them with an efficient calculator to compute the finances.
Subsequently, individuals looking for best fixed deposit calculator can make use of pointers mentioned above and choose one that best serves their purpose. By making accurate calculations, they will be able to make wise investment strategies.
