Hence the total interest earned in May 2022 is Rs 624.66
While the interest is calculated daily, it is credited to the depositor’s account only every three or six months based on the bank’s policy.
Fixed Deposit Interest Calculation
Calculation of interest on Fixed Deposits is relatively simpler if they are held until maturity. However, if you prematurely withdraw the FD, then the bank can levy a penal interest. Let’s understand these interest calculations with the help of an example.
Rajeev opens a Fixed Deposit for Rs.200,000 for a period of one year. The rate of interest offered by the bank is 8% per annum. On the same day, the rate of interest for a six-month deposit was 6%. Also, in the event of a premature withdrawal of FD, the bank charges 0.5% as a penalty.
Scenario 1: Rajeev holds the FD until maturity
The interest earned by an FD is calculated as follows:
FD Interest=Principal ×