what is maturity amount in fixed deposit?
I can understand that the term ‘maturity amount’ makes the fixed deposit concept complex. Let me define ‘what is the maturity amount in FD?’
The maturity amount refers to the total sum you will receive upon completion of your fixed deposit term. It includes:
Your original investment (principal amount) + the interest you earn over the tenure.
Banks or other financial institutions calculate it according to their determined interest rate and your chosen compounding frequency. There are 3 frequencies:
- Quarterly
- Half-yearly
- Yearly
Let me help you understand it with a simple example.
If you invest ₹5,00,00 in a fixed deposit for 5 years and get 7% interest rate and choose quarterly compounding frequency, your maturity amount will be ₹7,07,390 after 5 years. The amount will change if you choose yearly or half-yearly compounding, as the interest calculation will be different then.
| Compounding Frequency | Principal Amount | Maturity Amount |
|---|---|---|
| Yearly | ₹5,00,000 | ₹7,01,276 |
| Half-yearly | ₹5,00,000 | ₹7,05,300 |
| Quarterly | ₹5,00,000 | ₹7,07,390 |
You can easily calculate it using a fixed deposit returns calculator. Just enter the details accurately and see the maturity amount on your screen. You can rely on this online tool and make the smartest investment decision on your own.