How is total interest in fixed deposit calculated?

8 thoughts on “How is total interest in fixed deposit calculated?”

2. The calculation of interest on fixed deposits can vary slightly among banks. While most banks follow a monthly compounding method, it seems that Prime bank calculates interest on a daily basis. This can lead to a slight difference in the final interest amount.
   To calculate the interest on your fixed deposit, Prime bank likely divides the annual interest rate by 365 (or the actual number of days in a year, accounting for leap years) to determine the daily interest rate. Then, they multiply this daily rate by the number of days your deposit remains with the bank.

   **Example:**
   Let’s take your example of a ₹10 lakh fixed deposit with a 10% annual interest rate for 6 months. The calculation may look something like this:
   Daily interest rate = 10% / 365 = 0.0274%
   Interest for 6 months = ₹10,00,000 * 0.0274% * 183 days
   The number of days considered can vary depending on the exact calculation method of the bank. In your case, it seems to result in a slightly lower interest amount due to the daily calculation.

   *** It’s important to note that tax deductions are usually made at the time of interest payment, as per the prevailing tax rules.*

   The exact interest amount received may differ slightly between banks due to rounding methods and calculation methodologies. If you have concerns, contact your bank for clarification on their specific calculation methods.

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3. Conversion of months to year (180/365) ~ 0.49315
   Interest Rate = 10%
   Principal= 10,00,000/-

   Use the above figure, Total Interest Without Taxes ~ 49,315.0685

   Since, the number of actual days may not be exactly 180
   Suggest you to get the interest for a day for above which would amount to ~ 263.9726
   Multiply this with the number of days in those 6 months (180-183) and from there less 5%, the calculated amount is how much you get!

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4. 10% vaneko nominal annual interest rate ho. Aba bank le kun tarikako compound garxa tei anusar le effective interest rate nikalera calculate garxa. Also daily compounding ho vane month ma kati din xa tesle pani affect garxa. So it’s not exactly accurate as we calculate.

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5. It depends on the terms of FD. ADBL for eg uses simple interest method where your calculation above holds true. Few banks such as Prabhu bank compounds interest quarterly where total interest over 6 months would be ((1000000*(1.025^2)-1)*0.95) after TDS. I’ve heard few banks even compound interest continuously but haven’t seen any yet.

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6. Tax on Interest is around 5 percent

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7. at 10% the interest for 1,000,000 is 273.972603. 1to 2 days ko difference aaula days ma calculate garda. 500 rupees samma ko tala mathi hola tesari.
   9.9% calculate garda pani 500 rupees jati ko difference aaucha.

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8. It might be 10% of 10 lakhs divided by 365 and then multiplied by the number of days.

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9. calculated on daily basis on almost all i believe. if it is on months they you can move money in a day and earn interest for a month 😀

   banks are there to earn profits in the scale of arba (see the recent reports) so they better know how to do the damn hisab

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