How maturity is calculated
The formula is the standard compound interest one: M = P × (1 + r/n)^(n×t). Most banks compound fixed deposits quarterly, which is the default here, though monthly and yearly are also common depending on the product and country.
Compounding frequency has a real effect on the effective yield. A deposit quoted at 7% compounded quarterly actually returns about 7.19% effective annual yield, which is the figure worth comparing across products.
Cumulative versus payout deposits
This calculator models a cumulative deposit, where interest stays in and compounds until maturity. Many banks also offer payout deposits that pay interest monthly or quarterly into your account. Payout options give you income but no compounding, so the total returned is lower.
Breaking a deposit early usually costs a penalty of roughly 0.5 to 1% off the rate, plus you often revert to the rate applicable for the period actually held. Plan the tenure so you are not forced to break it.
Frequently asked questions
Is fixed deposit interest taxable?
In most countries, yes, as ordinary income in the year it accrues. Results here are before tax, so apply your local rate to the interest figure.
What compounding should I select?
Quarterly is the most common convention for fixed deposits worldwide and is the default here. Check your bank's terms, since it changes the maturity amount.
What happens if I break the deposit early?
Most banks apply a penalty of about 0.5 to 1 percentage point and pay only the rate applicable to the period actually completed.
Are fixed deposits safe?
They carry no market risk and are typically covered by deposit insurance up to a limit that varies by country. The real risk is inflation eroding purchasing power over long tenures.
Should I ladder my deposits?
Laddering across several maturities gives you regular access to cash and averages out rate changes, rather than locking everything at one moment's rate.
How does this compare to a recurring deposit?
A fixed deposit invests one lump sum upfront. A recurring deposit invests monthly. For the same total, a fixed deposit earns more because the full amount compounds from day one.