Should you be using a Fixed Deposit interest calculator? This article talks about using an FD interest calculator and how can you calculate the income you’ll be generating.
A Fixed Deposit account is a financial instrument that helps you earn some money via surplus cash.
The Fixed Deposit interest calculator is used to calculate the interest earned and the maturity amount. Using this you’ll be able to ascertain which FD scheme is best for you.
Why should you open an FD account?
- Savings vs FD account
Compared to a savings account, a Fixed Deposit account provides you with a higher rate of interest. Use an investment calculator online to check the difference in amount.
Banks offer anything between 8% to 9% when you invest in an FD, but if you invest in a savings account you’ll get only 4% to 5%. - Payment
You can either get your interest paid monthly or quarterly. The Fixed Deposit compound interest calculator helps you ascertain the value you’ll be getting in hand post maturity of the FD. You can find out how the amount differs on choosing monthly/quarterly, half-yearly/yearly. - Liquidity
Fixed Deposit is the only form of investment that lets you encash your investment in a day’s time. You’ll only be charged 1% of the sum if you break the FD before its maturity.
Other forms of investment have a long lock-in period and do not offer such flexibility. This makes them less desirable than Fixed Deposits as they fail to serving the primary purpose of making an investment, i.e; low risk, high liquidity, and good returns. Using the maturity calculator you’ll be able to find out the amount you’ll be getting if you don’t withdraw the amount before the end of tenure is over. - Tax
The interest you earn on your investment is taxable. If you want a tax relief, you can submit form 15G. In the case of a senior citizen form, you will have to submit form 15H to claim your returns. If you do not fall under the income tax slab, then you don’t need to worry about any of this. Fixed Deposit interest calculator will tell you the amount and you can check which slab it falls under.
You get tax-free FDs as well, the only drawback is that the interest rates will be lower when compared to normal FDs.
5. Middlemen
Today, if you’re making an investment, there will be different kinds of commissions and service charges. Be it brokerage or maintenance charges, middlemen are always around to take their cut.
In the case of an FD, no such charges are applicable. You only need to have an account with the bank and they’ll make your investment hassle free. It’s the age of technology, so, you can open an FD account without having to spend precious time waiting in queues at the bank or NBFC branch.
6. Easy loan
If you have made a Fixed Deposit in a bank, you’ll be eligible to take a loan without any hassle and the amount could be 80% to 90% of the investment amount. You don’t have to worry about putting anything as security to get the loan amount either.
If you are unable to pay the loan amount back, it’ll be adjusted with the Fixed Deposit amount.
How to open a Fixed Deposit account?
You need the below documents to get started:
- You must provide a document for proof of identity. You can use your PAN card or passport.
- You can use your electricity bill or driver’s license to provide an address proof.
- In the case of senior citizens, you must provide the bank with a document to prove your age. If you’re 60 years and above, you’ll get a higher rate of interest.
- The bank may also require proof of your signature, for this, you may present your passport or a signed cheque.
- Some banks also ask for an introduction letter from the account holder.
- Apart from the above, you will be asked to fill in a simple application form and then you’re done with the formalities.
So, these are a few reasons you should open a Fixed Deposit account today! You have all the information available to you on your computer screen, not just that, you can calculate everything using real values and make a smart move.
