What is Accrued Interest on FD?

Fixed Deposits (FDs)
1

Hi, what is accrued interest on fixed deposit?

2

If you are wondering ‘what is accrued interest on FD?’, it is the interest amount that accumulates over time, but you can not receive it until the tenure ends.

Sounds confusing?

Let me explain to you using an example:

If you invest ₹1 lakh in a fixed deposit for 5 years at 6% interest with quarterly compounding, you’ll earn about ₹38,041 in interest.

Choose yearly compounding instead, and your interest will be around ₹37,008.

You can calculate it easily using a fixed deposit returns calculator. Just enter all the details accurately, and the tool will calculate the interest within seconds.

However, the amount will change depending on factors affecting the accrued interest on the FD. They are:

Factors How it Affects Accrued Interest
Principal Amount Higher principal amount = higher accrued interest
Interest Rate Higher rates = higher accrued interest
Compounding Frequency Quarterly compounding = higher accrued interest

Yearly compounding = (comparatively) lower accrued interest|
|Tenure|Tenure affects the interest rate, and therefore the accrued interest.|

So, it is not the same for all your FDs. Calculate using online tools, and you can make informed decisions while booking fixed deposits.