How Much Does Compounding Frequency Change an FD's Maturity?
Take one fixed deposit and change only how often interest is added, to see what monthly, quarterly, half-yearly and yearly compounding do to the maturity and the effective annual yield.
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FD Calculator
Work out what a fixed deposit matures to for a rate and tenure you enter, see its effective annual yield, and compare two offers side by side.
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Work Out the Maturity
Enter the deposit and the quote you were given. Results update as you type.
Enter a deposit amount, an interest rate and a tenure to see what the deposit matures to.
How to Use the FD Calculator
- Enter the deposit amount, the interest rate you were quoted and the tenure in years and months.
- Choose how often interest is added: monthly, quarterly, half-yearly or yearly.
- Read the maturity amount, the interest and the effective annual yield. Results update as you change any value.
- To compare another offer, enter its rate (and its tenure, if it differs) under Compare With Another Offer.
Reading the Result
The maturity amount is the deposit plus the interest added over the tenure, with interest earning interest at the compounding you chose.
The effective annual yield is what one year grows to under that compounding. It is different from the quoted rate, which is the yearly rate before compounding, and it is not the growth over the whole tenure or the CAGR of another investment.
The total growth is the interest as a share of the deposit over the whole tenure. It is not a yearly figure.
Comparing two offers. Both use the same deposit and the same compounding. When the tenures differ, the maturity amounts are not like-for-like, because the money is deposited for different lengths of time: read the effective annual yields together with the tenures.
Assumptions and What Is Not Included
- The rate stays the same for the whole tenure, and interest stays in the deposit and earns interest.
- When the tenure ends part way through a compounding period, the remaining months earn simple interest pro rata. This is this calculator's own convention, not a rule every bank follows.
- Actual FD maturity may differ, because banks can use their own compounding dates, day-count conventions, rounding and product terms.
- Not included: tax and TDS, premature withdrawal, interest payout options, deposit insurance and future rate changes.
This is arithmetic on the numbers you enter, not a bank's quote or advice. See the disclaimer.
Example
Take ₹1,00,000.00 at a quoted 7% a year for 5 years, with interest added quarterly. It matures to ₹1,41,477.82, which is ₹41,477.82 of interest and an effective annual yield of 7.19%. With yearly compounding the same deposit matures to ₹1,40,255.17. Now compare 7.1% for 3 years (Option A) with 6.8% for 5 years (Option B), both quarterly: A matures to ₹1,23,507.50 and B to ₹1,40,093.85. B's amount is larger because it runs 2 years longer, while its effective annual yield (6.98%) is lower than A's (7.29%).
How It Is Calculated
Rate for one period i = yearly rate ÷ 100 ÷ periods a year.
Maturity = deposit × (1 + i)ᵏ × (1 + i × q ÷ L), where k is the number of whole compounding periods in the tenure, q is the months left over and L is the months in one period. With no months left over this is plain compound interest.
Effective annual yield = (1 + i)ᵐ − 1, where m is the periods in a year. Total growth = (maturity − deposit) ÷ deposit.
FD Calculator FAQ
What is the effective annual yield?
It is what one year grows to when the quoted rate is compounded the way you chose. With yearly compounding it equals the quoted rate; the more often interest is added, the slightly higher it is.
Will my bank's maturity match this?
Not necessarily. Banks use their own compounding dates, day-count conventions, rounding and treatment of a broken period, and products differ. This calculator shows the numbers you enter under the assumptions it states.
Why is the maturity alone not enough to compare two offers?
If one deposit runs longer, its maturity is larger partly because the money stays in for longer. The effective annual yield and the tenure, read together, show more than the maturity alone. This calculator does not rank offers.
What does the comparison use for the deposit and compounding?
Option B uses the same deposit amount and the same compounding as Option A. Only the rate and, if you enter one, the tenure differ.
Does it include tax or TDS?
No. Tax on interest, TDS, premature withdrawal and payout options are not included.
