A complete guide to fixed deposit monthly interest

Fixed Deposits (FDs) are preferred investment instruments for risk-averse investors. It helps you earn guaranteed returns on the deposited amount. You can choose between cumulative and non-cumulative FDs based on your financial needs and goals. Investors can earn the predetermined FD interest rate at regular intervals or maturity. Under the non-cumulative FD, you get interest credited to your account periodically. This helps you to have a stable income flow and lets you reap liquidity advantages. You can easily compute the FD monthly interest payouts beforehand and streamline your finances. In this regard, you can instantly use the FD calculator to determine the interest payouts.

  Advantage of the FD monthly interest payout

  Opting for a monthly payout fixed deposit plan has the following benefits.

  

●   Monthly income: Non-cumulative FD is an ideal choice if you intend to supplement your prevailing income or have another source of earning. As the name suggests, you get the interest payout every month when you opt for a monthly payout option.

●   Overdraft facility: You do not have to break your FD in an emergency, as some financial institutions extend overdraft facilities against regular FDs. This way, you can easily handle your liquidity requirements.

●   Steady cash flow: As fixed deposit remains unaffected by any market fluctuations, your monthly income isn’t hindered, and you will be sure of steady cash flow. You will keep earning the return as expected and manage your short-term liabilities efficiently.

●   Premature withdrawal facility: Regular FDs allow you to go for premature withdrawal. You have to bear a certain amount for doing so. However, this facility helps you to arrange funds for financial emergencies.

●   Nomination facility: Another notable benefit of a monthly payout FD plan is enlisting a beneficiary for the FD accounts.

  

  With a regular FD, you can get better returns than what you earn from your savings bank account. However, the interest earned from the non-cumulative FD is lower than that of the cumulative FD.

  

  How to calculate FD monthly interest?

  Here are the steps that will help you calculate your monthly returns from the fixed deposit using an FD calculator:

  

  Step 1: Go to the official portal of the financial institution where you wish to open the FD account.

  Step 2: Head to the ‘Deposit’ tab and choose ‘Fixed Deposit’.

  Step 3: Choose the FD calculator option and fill in the details.

  Step 4: Enter the deposit amount, tenure, and interest rate.

  Step 5: Choose’ Non-cumulative FD’ under the ‘Deposit Type’ option.

  Step 6: Then select the fixed deposit monthly interest payout option. You will find this under the ‘Payout frequency’ tab.

  

  Once you have entered all the details, you can see the result: the estimated maturity amount and FD monthly payout interest.

  

  Advantages of using an FD Calculator

  Here are the following benefits of using an FD calculator:

  

●   Saves time: This financial tool will help you get the desired results quickly. Usually, the manual computation determining the FD maturity amount takes time. With an FD calculator, you have to enter the required details, and it will show the result.

●   Exact calculation: FD maturity amount calculation is complex as it involves a lot of parameters. An FD calculator automates complex calculations, instantly providing an error-free result.

  

  How to prematurely withdraw an FD before maturity?

  The monthly FD payout option is an effective way to pay for some expenses. However, the return that you earn monthly might not be enough to cover hefty expenses like home renovation costs, hospital bills, etc. In such a situation, you might have to close the account and withdraw the entire amount before maturity.

  

  However, premature withdrawal from an FD can attract a penalty. Knowing about this penalty is important to avoid any last-minute hassle.

  

  Here are the steps to withdraw an FD before maturity online:

  

  Step 1: Go to the bank’s online platform, where you have the FD account and log in.

  Step 2: Navigate to the ‘Fixed Deposit’ tab and choose the ‘Close Fixed Deposit’ option.

  Step 3: You might need to undergo verification steps as stated by the financial institution to process the request.

  Step 4: You may have to verify the email or message to confirm the request.

  Upon completing the steps and after all the processing is done, your money will be transferred to your savings account.

  

  In the offline method, you must visit the financial institution and fill out the FD closing form. The request processing will begin and carry out statutory deductions per closure norms. Once all the steps have been taken, the transfer of funds to your savings account will happen.

  

  Final thoughts

  Every financial institution allows you to choose the interest payout frequency for FDs. Opting for the monthly payout option certainly has advantages and helps you manage regular expenses. But, compared to cumulative FDs, it has its disadvantages as well. So, consider all your options and opt for the ideal pay-out option.