Fixed Deposits (FDs) remain one of the safest investment options in India. If you have ₹7 lakh (₹700,000), you might wonder “How much will it grow in 3 years, 5 years, or even 10 years?” In this article, you’ll get a complete calculator, real-world interest rates, tips to maximize returns, and answers to frequently asked questions.
What Are the Current FD Interest Rates in India (2025)?
To figure out how much your ₹7 lakh FD will earn, we need to know what interest rates banks are offering at different tenors. These vary by bank, whether the depositor is a senior citizen, and the amount.
Here are some sample rates:
Note: Rates keep changing; always check latest rates. Also, senior citizens often get extra ~0.25-0.50% p.a. premium.
How Does Compounding Work in FD?
To calculate returns properly, one must account for compounding. Key factors:
- Principal (P): initial deposit (₹7,00,000)
- Interest rate (r): e.g. 6.5% per annum
- Tenure (t): number of years (3, 5, 10)
- Compounding frequency (n): yearly, half-yearly, quarterly, monthly etc.
The formula for maturity amount (for compound interest) is:
A = P × (1 + r/n)^(n × t)
- A = maturity amount (principal + interest)
- P = ₹7,00,000
- r = annual rate (in decimal, e.g. 6.5% = 0.065)
- n = number of compounding periods per year
- t = tenure in years
If interest is simple (rare for long FD), calculation is P + (P × r × t). But most big banks do compounding (quarterly or annually) for longer tenures.
Estimated Returns for ₹7 Lakh FD Over 3, 5, and 10 Years
Below are estimates of what your ₹7 lakh FD can grow to, under different interest rate assumptions and compounding annually. These are illustrative; actual may vary due to bank rate, compounding frequency, tax, etc.
| Scenario | Interest Rate (p.a.) | Compounding Frequency | Maturity after 3 years | Interest Earned in 3 yrs | Maturity after 5 years | Interest in 5 yrs | Maturity after 10 years | Interest in 10 yrs |
| Conservative (6%) | 6.00% | Annually | ~ ₹8,36,000 | ₹1,36,000 | ~ ₹9,36,000 | ₹2,36,000 | ~ ₹13,28,000 | ₹6,28,000 |
| Mid-range (6.75%) | 6.75% | Annually | ~ ₹8,64,000 | ₹1,64,000 | ~ ₹10,08,000 | ₹3,08,000 | ~ ₹14,82,000 | ₹7,82,000 |
| Optimistic / Senior Citizen Bonus (8%) | 8.00% | Annually | ~ ₹9,03,000 | ₹2,03,000 | ~ ₹11,44,000 | ₹4,44,000 | ~ ₹16,01,000 | ₹9,01,000 |
How the numbers are derived (approximation):
- For 3 years at 6%: A = 700,000 × (1.06)^3 ≈ ₹8,36,000
- For 5 years at 6.75%: A = 700,000 × (1.0675)^5 ≈ ₹10,08,000
- For 10 years at 8%: A = 700,000 × (1.08)^10 ≈ ₹16,01,000
If compounding is more frequent (quarterly or semi-annual), the maturity amount will be slightly higher.
Using an FD Calculator: Step-by-Step Guide
To avoid manual errors, it helps to use an online FD calculator. Here’s how:
- Go to bank site or aggregator (Groww, Paisabazaar, ICICI etc.).
- Enter Principal: ₹7,00,000
- Enter Tenure: 3, 5, or 10 years
- Choose Interest rate (you can test different – 6%, 6.75%, 8%, etc.)
- Select Compounding frequency (annual / quarterly)
- Click to compute: get Maturity amount & Interest earned — this helps you compare banks.
What Affects Your FD Returns?
To make the most of your ₹7 lakh FD, understand the factors that impact how much you actually get.
- Interest rate: Different banks offer different rates; senior citizens often get a premium.
- Tenure: Longer tenures often attract slightly higher rates (not always).
- Compounding frequency: More frequent compounding (quarterly etc.) gives better returns.
- Amount invested: For very large amounts, banks sometimes offer special rates.
- Taxation / TDS: Interest is taxable. TDS may be deducted if interest exceeds threshold.
- Premature withdrawal: If you break the FD early, penalty applies; reduced interest.
- Inflation: Doesn’t affect what you get, but the real value of returns depends on inflation.
Maximizing FD Returns: Tips for ₹7 Lakh FD
Here are some practical tips:
- Compare FD rates across banks: Use aggregator sites; sometimes smaller banks / NBFCs offer higher rates.
- Look for special schemes & bonuses: Senior citizen benefits, festive offers, etc.
- Consider compounding frequency: Aim for at least annual compounding; quarterly is better.
- Ladder FDs: If unsure about rates staying high, split your amount: some for short term, some for long term.
- Reinvest returns wisely: If interest payments are quarterly/monthly, reinvest or put in high-yield instruments.
- Beware tax & inflation: Compute net returns after tax; consider inflation so your real purchasing power is sustained.
Real Example: ₹7 Lakh FD With Different Rate Assumptions
Let’s put together a few real-bank rate examples:
- Suppose a bank offers 6.5% p.a. for 3-year FD.
- Another bank offers 7.0% p.a. for 5 years.
- And for 10 years, maybe 6.75% p.a.
Using these:
- ₹7,00,000 at 6.5% for 3 years → Maturity ≈ ₹8,45,000 (Interest ≈ ₹1,45,000)
- ₹7,00,000 at 7.0% for 5 years → ≈ ₹9,83,000 (Interest ≈ ₹2,83,000)
- ₹7,00,000 at 6.75% for 10 years → ≈ ₹13,03,000 (Interest ≈ ₹6,03,000)
These are estimates; exact numbers depend on compounding (quarterly etc.), bank policies, etc.
Risks & Things To Watch Out For
- Interest rate changes: If you lock at a lower rate, you may lose out if rates go up later.
- Liquidity: FDs are less liquid; breaking early often incurs penalty.
- Inflation: Even if returns look good nominally, real returns might be small if inflation is high.
- Tax impact: Interest income is added to income and taxed as per your slab. TDS may reduce your effective return.
- Bank solvency / credibility: Stick with reputable banks to ensure safety of your capital.
Tools & Resources
- Bank FD calculators (SBI, ICICI, HDFC etc.)
- Aggregator sites to compare FD interest rates across banks
- RBI guidelines / notifications about FD interest rates & taxation
Conclusion
If you invest ₹7 lakh in a Fixed Deposit in India, over 3, 5, or 10 years, you can expect a solid, predictable return depending on the rate. At ~6-7% p.a., compounded annually, your money could grow to around:
- ₹8.3-₹9.0 lakh in 3 years
- ₹9.8-₹11.5 lakh in 5 years
- ₹13-₹16 lakh in 10 years
These are approximate; actual results depend on bank, rate, compounding, and tax. FDs are great if you value safety and certainty more than very high returns. But also consider inflation & tax to understand your real returns.
Frequently Asked Questions (FAQs)
1. What exactly is a Fixed Deposit (FD)?
A Fixed Deposit is an investment where you deposit a sum with a bank for a fixed tenure at a fixed rate of interest. You earn interest either cumulatively (added to principal) or periodically (monthly/quarterly), and receive the amount at maturity.
2. How is FD interest calculated?
Using the formula for compound interest: A = P (1 + r/n)^(n × t). For simple interest (rare for long FDs) interest = P × r × t.
3. What is compounding frequency, and why does it matter?
Compounding frequency (annually, semi-annually, quarterly, monthly) determines how often the interest is added to the principal. More frequent compounding yields more total interest over time.
4. Do senior citizens get higher FD rates?
Yes, many banks in India offer extra interest (usually 0.25%-0.50% p.a.) for senior citizens. Always check the senior citizen FD rate.
5. What happens if I withdraw FD before maturity?
Premature withdrawal typically leads to a penalty. The bank may calculate interest at a lower rate, deduct penalty, etc. So the effective return will be less.
6. How does tax / TDS affect FD returns?
The interest earned is taxable as per your income tax slab. Also, banks deduct TDS if interest exceeds a threshold. You’ll get gross interest, but net (after tax) is what matters.
7. Is ₹7 lakh a large FD? Will larger amounts get better rates?
Sometimes banks offer marginally better rates for larger deposits, or special FD schemes. But usually for amounts like ₹7 lakh, you’re within standard slabs for many banks. Still check.
8. How to compare FD vs other safe investments?
Compare risk, liquidity, return, tax and inflation. Other options: government bonds, small savings schemes, post office schemes etc. Sometimes these can beat FD in real returns.
9. What is the real return (adjusted for inflation)?
Real return = nominal return minus inflation. If FD gives you 6.5% but inflation is 5%, real return is ~1.5%. So inflation can eat a large part of nominal earnings.
10. Should I split my FD (laddering) or keep all in one?
Laddering (splitting into different tenures) helps with liquidity and rate risk. If rates rise, you can reinvest at higher rates when shorter-tenure FDs mature. It’s generally safer.
- Should I split my FD (laddering) or keep all in one?
Laddering (splitting into different tenures) helps with liquidity and rate risk. If rates rise, you can reinvest at higher rates when shorter-tenure FDs mature. It’s generally safer.
