How do you calculate fixed deposit interest for 3 months?

Calculating Interest for 3-Month Fixed Deposits: A Simple Guide

Fixed deposits (FDs) offer investors a secure way to grow their savings over a specific period. Understanding how to calculate interest is crucial for maximizing returns. In the case of 3-month FDs, the calculation is straightforward.

Formula for Calculating 3-Month Fixed Deposit Interest:

Maturity Value = Principal + (Principal x Interest Rate x Duration)

Step-by-Step Calculation:

1. Determine the Principal: This is the initial amount you deposit into the FD.
2. Identify the Interest Rate: The interest rate is typically provided by the bank or financial institution.
3. Calculate the Duration: For a 3-month FD, the duration is 0.25 years (since 3 months = 0.25 x 12 months).
4. Substitute the Values: Plug the principal, interest rate, and duration into the formula.

Example:

Suppose you invest Rs. 10,000 in a 3-month FD with an interest rate of 6% per annum.

Maturity Value = 10,000 + (10,000 x 0.06 x 0.25)
Maturity Value = 10,000 + 150
Maturity Value = Rs. 10,150

Conclusion:

Calculating the maturity value of a 3-month FD involves a simple multiplication and addition. By understanding this straightforward formula, you can accurately determine the future value of your investment and make informed financial decisions.