CD Calculator

How a certificate of deposit grows

A certificate of deposit (CD) locks a lump sum with a bank for a fixed term at a rate agreed on the day you book it. Interest compounds at a set frequency — you can choose annual, semi-annual, quarterly or monthly here — and the maturity value follows the standard compound-interest formula `A = P × (1 + r/n)^(n·t)`. Because the rate is fixed upfront, you know the exact payout the moment you invest.

In India, the retail equivalent of a CD is a bank fixed deposit, while the formal Certificate of Deposit is a negotiable money-market instrument issued by banks to large investors, usually at a discount to face value.

Why compounding frequency matters

For the same nominal rate, crediting interest more often produces a higher maturity value, because each credit starts earning interest sooner. The effect is modest over one year but adds up over a long term:

• Annual — interest added once a year.
• Quarterly — the Indian standard, a small lift over annual.
• Monthly — the highest of the options here for a given rate.

What affects your maturity value

• Principal — the lump sum you lock in.
• Interest rate — varies by bank, term and depositor category.
• Term — longer terms usually carry higher rates and allow more compounding.
• Compounding frequency — more frequent compounding raises the effective yield.

Remember the maturity figure is pre-tax. Interest is added to your income and taxed at your slab rate, with TDS deducted above the annual threshold.

Getting the most from a CD

The biggest risk with a single long deposit is needing the money early and paying a withdrawal penalty. A laddering approach — splitting the total across several CDs maturing at staggered dates — keeps part of your money accessible while still capturing longer-term rates. Also compare offers across banks and NBFCs, which price deposits differently, and if your income is below the taxable limit, file Form 15G or 15H so the bank does not deduct TDS unnecessarily.