Fixed deposits offer high flexibility in many aspects, including tenure and payouts. Apart from generating the complete return at maturity, fixed deposits often provide interest payouts at regular intervals. Monthly payout is a popular option in India. It is ideal for investors requiring a regular source of income.
Investors can calculate the monthly payout amount to plan their finances adequately. Join us as we explore the various methods of calculating monthly interest accumulated in a 1 lakh fixed deposit account.
Two Methods of Calculating Monthly Interest for 1 Lakh Fixed Deposit
A simple formula can help manually calculate monthly interest rates on fixed deposit investments. However, an online FD interest calculator ensures faster and more accurate results.
Formula to Calculate Manually
There are 2 types of FDs – cumulative and non-cumulative. The interest is compounded regularly and paid at maturity along with the interest. Hence, the compounding interest formula is followed. On the contrary, no compounding occurs in non-cumulative FDs, allowing them to offer monthly payouts. The simple interest formula is followed to calculate such FD interest rates.
Simple Interest Formula: P + (P x r x t/100) = M
Here,
‘P’ is the principal investment amount.
‘r’ refers to the FD interest rates.
‘t’ is the tenure in years.
‘M’ is the total FD returns.
Suppose an investor has invested INR 1 lakh at an interest rate of 8% for 5 years. With the formula mentioned above, the total return will be:
1,00,000 + (1,00,000 x 8 x 5/100) = INR 1,40,000
You can now calculate the payable interest by subtracting the initial investment from the total payable amount:
Total payable amount at maturity – initial investment = Interest payout
INR 1,40,000 – INR 1,00,000 = INR 40,000
Now, divide the total interest by the tenure in months to generate the monthly interest payout:
40,000 / (5*12) = INR 666.66
FD Interest Calculator
A fixed deposit calculator can streamline calculating interest, eliminating any need for manual computation. Many digital calculators are available online. Do your research and pick a calculator. The next steps are fairly simple and can differ slightly based on the selected calculator.
- Open the online fixed deposit calculator.
- Enter the total investment amount.
- Enter the FD interest rates.
- Select the tenure.
- Click on the ‘Calculate’, ‘Invest Now’, or any similar button on the FD interest calculator to prompt the calculation. The screen will show you the amount instantly.
Why Use an FD Calculator Online?
Using an FD calculator online has many benefits!
- It’s quicker than a manual calculation of FD interest rates.
- It removes the chances of miscalculation.
- It allows fast and easy comparison of different FDs.
- It assists in informed investment decisions.
Monthly Interest on INR 1 Lakh Fixed Deposit
While investors can use an online FD interest calculator to calculate their respective returns, the table below shows the monthly interest payout from an FD of INR l lakh with varying interest rates!
| FD Amount | FD Interest Rates Per Annum | Monthly Payout |
| INR 1 lakh | 3.00% | INR 208.33 |
| INR 1 lakh | 3.50% | INR 250 |
| INR 1 lakh | 4.00% | INR 291.66 |
| INR 1 lakh | 4.50% | INR 333.33 |
| INR 1 lakh | 5.00% | INR 375 |
| INR 1 lakh | 5.50% | INR 416.66 |
| INR 1 lakh | 6.00% | INR 458.33 |
| INR 1 lakh | 6.50% | INR 500 |
| INR 1 lakh | 7.00% | INR 583.33 |
| INR 1 lakh | 7.50% | INR 625 |
| INR 1 lakh | 8.00% | INR 666.66 |
| INR 1 lakh | 8.50% | INR 708.33 |
Benefits of Monthly Income Fixed Deposits
There are many advantages of opening a monthly income fixed deposit.
- Monthly income FD interest rates are better than typical savings accounts.
- Senior citizens and women investors can avail of higher interest rates than regular investors.
- These fixed deposits offer all the known perks of FDs, like overdraft, nomination, and auto-renewal facilities.
Eligibility Criteria for Monthly Income Fixed Deposits
Pre-decided eligibility criteria for monthly income fixed deposits resonate with the regular ones. To avail of the benefits, you must be
- An individual over the age of 18
- A company
- A minor with a guardian
- A HUF
- An NRI
- An association
- An institution
Wrapping Up!
Fixed deposits have been a popular investment choice for those looking for high returns without taking much risk. Since the principal amount is locked in and the interest rates are fixed, FDs are generally not influenced by any market fluctuation. They continue to earn and payout steady returns. Take advantage of the digital facilities and use an online fixed deposit calculator to plan your finances best.
Note that cumulative fixed deposits offer greater chances of capital appreciation than non-cumulative options. If you want to enjoy the benefits of both FDs, divide your total investment amount into two different FDs.