1. What is Accrued Interest on FD?

Accrued interest on a fixed deposit is the interest earned over a specific period before maturity. It represents the amount that has accumulated but hasn't been paid out yet.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( Principal \) — Initial investment amount
• \( Rate \) — Annual interest rate (as percentage)
• \( Days \) — Number of days interest is being calculated for

Explanation: The formula calculates the proportional interest earned for the given number of days based on the annual rate.

3. Importance of Accrued Interest Calculation

Details: Calculating accrued interest helps investors understand their earnings before maturity, plan finances, and compare different investment options.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage (e.g., 5 for 5%), and the number of days. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this the same as compound interest?
A: No, this calculates simple interest. For compound interest, the calculation would be different as it includes interest on interest.

Q2: Why divide by 365 days?
A: This standardizes the calculation to an annual basis, as the interest rate is typically quoted per annum.

Q3: What if my FD has quarterly compounding?
A: This calculator uses simple interest. For compounding FDs, you would need a different formula that accounts for compounding periods.

Q4: Does this include taxes on interest?
A: No, this shows gross interest before any tax deductions. Actual payout may be less depending on tax laws.

Q5: Can I use this for partial withdrawals?
A: Yes, this can help calculate interest earned up to the withdrawal date, though some banks may have penalties for early withdrawals.