The formula your bank actually uses
A = P × (1 + r/4)^(4t)
Quarterly compounding is the Indian banking convention for cumulative FDs: every three months the accrued interest joins the principal and starts earning itself. On ₹1 lakh at 7% for 5 years, that is 20 quarters at 1.75% each: ₹1,41,478. Simple interest would give ₹1,35,000; annual compounding ₹1,40,255. The quarterly convention is why the bank's printed maturity beats both.
What common deposits mature to
| Deposit | Rate | 5-year maturity |
|---|---|---|
| ₹1,00,000 | 6.5% | ₹1,38,042 |
| ₹1,00,000 | 7.0% | ₹1,41,478 |
| ₹1,00,000 | 7.5% | ₹1,44,995 |
| ₹5,00,000 | 7.0% | ₹7,07,389 |
The tax haircut, made visible
Interest is taxed at your slab, and that changes the ranking of options more than the headline rate does. A 7% FD held by someone in the 30% bracket nets roughly 4.9% after tax, below typical inflation, meaning the deposit preserves nominal money while quietly losing purchasing power. Run your net rate through the inflation calculator before parking long-term money in FDs; for 15-year horizons, compare against the tax-free PPF, and for market-linked alternatives, the SIP calculator shows what the same monthly amount does at equity assumptions.
Getting the details right
- Cumulative vs payout FDs: this calculator models cumulative (interest reinvested). Monthly/quarterly-payout FDs pay simple interest out and mature at just the principal, and usually quote a slightly lower effective rate.
- Senior citizen rates typically add 0.25–0.75%. Enter the rate you are actually offered.
- Deposit insurance covers ₹5 lakh per depositor per bank (DICGC). Larger sums are safer split across banks, which pairs naturally with laddering.
- Rates change with the cycle. The figure this page computes is locked only when you book the deposit; the rate table on your bank's site is the source of truth.