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WORKED EXAMPLE

₹5 Lakh Fixed Deposit for 1 Year — Maturity Amount

Real computed maturity value for a ₹5 lakh fixed deposit over 1 year at 7% interest, quarterly compounding — see the exact maturity amount and interest earned.

Maturity Amount

5,35,929.52

Open this scenario in Fixed Deposit Calculator

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Parking a ₹5 lakh lump sum in a 1-year fixed deposit is one of the most common ways Indian savers get a guaranteed, low-risk return on idle cash.

The Scenario

  • Principal amount: ₹5,00,000
  • Interest rate: 7% per annum
  • Tenure: 12 months (1 year)
  • Compounding: Quarterly, cumulative payout at maturity

The live result above is computed using the exact same compound interest formula the Fixed Deposit Calculator applies — the real output for this principal, rate, and tenure.

What This Means

Because interest compounds quarterly rather than just once a year, the effective annualised yield on this FD comes out a little above the nominal 7% rate — a small but real benefit of more frequent compounding that's easy to overlook when comparing FD rates across banks. Over just 12 months the total interest earned is modest relative to the principal, which is the expected trade-off for the safety and liquidity an FD offers compared to market-linked options over the same period.

Try Your Own Numbers

Your actual deposit amount, the rate your bank offers, and your preferred tenure are likely different. Click through to the Fixed Deposit Calculator — the ₹5 lakh principal and 12-month tenure carry over automatically, and you can adjust the rate, compounding frequency, or payout mode to match your actual FD offer.

Frequently Asked Questions

7% p.a. is a reasonable mid-range assumption for a 1-year fixed deposit at most Indian banks, though actual rates vary by bank and can be higher for senior citizens or during promotional periods. Always check your specific bank's current rate card before booking an FD.
Quarterly compounding means interest is calculated and added to the principal four times over the year rather than once, so each subsequent quarter earns interest on a slightly larger balance. This gives a marginally higher effective yield than the nominal 7% rate — in this scenario, the effective annualised yield works out a little above 7%.
Cumulative FDs reinvest the interest and pay everything out at maturity, which maximises the final amount through compounding — that's what this scenario uses. Monthly or quarterly payout options pay interest as simple interest on a fixed schedule instead, useful if you need regular income, but the total payout ends up lower than cumulative over the same tenure.
A longer tenure lets compounding work over more periods, so the maturity amount grows faster than linearly with time. Try extending the tenure directly in the [Fixed Deposit Calculator](/fixed-deposit-calculator-india/) to see how a 2 or 3-year FD compares.
For a lump sum you already have in hand, an FD is generally the better fit since it puts the full amount to work compounding from day one. See [FD vs RD](/articles/fd-vs-rd/) for the full comparison, since a recurring deposit is built for building up savings from regular monthly contributions instead.
Compounding means each period's interest is calculated on a slightly larger balance than the last, so more frequent compounding (quarterly versus annually) squeezes out a bit more return from the same nominal rate. See [Simple vs Compound Interest](/articles/simple-vs-compound-interest/) for the underlying math and why the gap widens meaningfully over longer tenures.

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