Monthly Interest Calculator for ₹5 Lakh
Interest Calculation Results
How to Calculate Monthly Interest on ₹5 Lakh Fixed Deposit (FD) in India
Thinking about putting ₹5 lakh into a Fixed Deposit (FD)? Great choice! FDs are one of the safest and most popular investment options in India. They offer guaranteed returns, zero market risks, and are super easy to understand—even if you’re not into finance.
But here’s the big question:
How much interest will you earn each month if you invest ₹5 lakh in an FD?
In This Guide, You’ll Learn:
- How banks calculate FD interest
- Difference between simple and compound interest
- How to use our easy ₹5 Lakh FD Interest Calculator
- Best FD rates offered by top Indian banks in 2024
- FD tax rules you should know
- Pro tips to maximize your returns
First, What Is FD Interest and How Is It Calculated?
Banks offer two types of interest on Fixed Deposits:
Simple Interest – Best for Short-Term Plans
Simple interest is calculated only on your original deposit (also called the principal). It’s easy to calculate and gives you regular income—perfect if you want monthly payouts.
Formula:
Simple Interest = (P × R × T) ÷ 100
- P = Principal amount (₹5,00,000)
- R = Annual interest rate (%)
- T = Tenure in years
Example:
Let’s say you invest ₹5,00,000 at 7% for 1 year.
Interest earned = ₹35,000
Monthly income = ₹2,916 (approx.)
Compound Interest – Best for Long-Term Growth
Compound interest is where things get interesting. Here, interest is calculated not just on your initial deposit, but also on the interest you’ve already earned. Over time, your money grows faster.
Formula (Quarterly Compounding):
A = P × (1 + R ÷ 4×100) ^ (4×T)
- A = Maturity amount
- P = Principal (₹5,00,000)
- R = Annual rate (%)
- T = Time in years
Example:
At 7% compound interest for 1 year:
Maturity amount = ₹5,35,865
Total interest = ₹35,865
Monthly average return = ₹2,988
How to Use It:
- Enter the interest rate (Check your bank’s current FD rate—like SBI 6.5%, HDFC 7.5%).
- Choose interest type – Simple (non-cumulative) or Compound (cumulative).
- Enter tenure – like 12, 24, or 60 months.
- Hit Calculate – Instantly see your monthly interest and total return!
Best FD Rates in India
| Bank | Regular Rate (p.a.) | Senior Citizen Rate (p.a.) |
|---|---|---|
| SBI | 6.50% | 7.00% |
| HDFC Bank | 7.00% | 7.50% |
| ICICI Bank | 7.00% | 7.50% |
| Post Office | 6.80% | 7.30% |
| Axis Bank | 7.10% | 7.75% |
📌 Note: Rates may vary based on the tenure (1 to 5 years), so always double-check with the bank before investing.
Simple vs. Compound Interest: Which One’s Better?
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Returns | Lower | Higher |
| Best For | Short-term (1–2 yrs) | Long-term (3+ yrs) |
| Payout | Monthly or Quarterly | Paid at maturity |
🔍 Pro Tip:
- Want regular monthly income? Go for non-cumulative (simple interest) FDs.
- Want higher overall returns? Pick cumulative (compound interest) FDs.
Tax Rules on FD Interest
FD interest isn’t tax-free—so here’s what you need to know:
- TDS (Tax Deducted at Source):
10% is deducted if your total FD interest in a year exceeds ₹40,000 (₹50,000 for senior citizens). - Taxable Income:
All interest earned is added to your yearly income and taxed as per your income tax slab.
Want to Save Tax? Try Tax-Saving FDs!
- Lock-in period of 5 years
- No premature withdrawal
- Eligible for ₹1.5 lakh deduction under Section 80C
Final Thoughts: Which FD Strategy is Right for You?
✅ Short-Term Investor (1–2 years)
→ Go for Simple Interest FDs with monthly payout
✅ Long-Term Investor (3+ years)
→ Choose Compound Interest FDs for maximum return
✅ Senior Citizen?
→ Most banks offer 0.50% extra on FD rates!
And don’t forget to use our FD calculator to explore different banks and plans before locking in your ₹5 lakh.
