Question 1

What is a fixed deposit?

Accepted Answer

A fixed deposit (FD) is a financial instrument where you deposit a lump sum for a fixed period at a predetermined interest rate.

Question 2

How is FD interest calculated?

Accepted Answer

FD interest is calculated using the compound interest formula based on the compounding frequency (quarterly for most banks).

Question 3

Are FD returns taxable?

Accepted Answer

Yes, interest earned on FD is taxable as per your income tax slab. TDS is deducted if interest exceeds ₹40,000 per year.

Question 4

Can I break my FD early?

Accepted Answer

Yes, but premature withdrawal usually attracts a penalty, typically 0.5–1% reduction in the interest rate.

Question 5

What is the difference between cumulative and non-cumulative FD?

Accepted Answer

Cumulative FDs reinvest interest and pay at maturity, while non-cumulative FDs pay interest at regular intervals.

FD Calculator – Fixed Deposit Returns

Fixed Deposit (FD) Calculator