Fixed Deposit Formula Explained, With Examples
Every fixed deposit result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
Interest = P × rate × months ÷ 12.
What each input means
- Deposit (S$): the value you enter in the calculator.
- Interest rate (% a year): the value you enter in the calculator.
- Tenure (months): the value you enter in the calculator.
Example
For example, with these inputs:
- Deposit (S$): 20,000
- Interest rate (% a year): 2.8
- Tenure (months): 12
the calculator returns:
- Interest earned: S$560.00
- Maturity amount: S$20,560.00
How the result changes
The table keeps the other inputs at their example values and changes deposit (s$).
| Deposit (S$) | Interest earned | Maturity amount |
|---|---|---|
| 20,000 | S$560.00 | S$20,560.00 |
| 10,000 | S$280.00 | S$10,280.00 |
| 15,000 | S$420.00 | S$15,420.00 |
| 25,000 | S$700.00 | S$25,700.00 |
| 30,000 | S$840.00 | S$30,840.00 |
Why it matters
Interest rates, instalments and returns compound over years, so a small difference in rate or tenure turns into thousands of dollars. Working the numbers out yourself makes it easier to compare bank offers, avoid expensive debt and plan savings goals.
Compounding is the reason long-term saving works: returns earn further returns, so the growth curve steepens over time. The same maths works against you with debt, which is why credit card balances at around 27% a year grow quickly if only minimum payments are made.
An emergency fund of three to six months of essential expenses protects you from having to borrow at high rates when something unexpected happens. Once that buffer is in place, extra savings can go towards longer-term goals and investments.
Interest in Singapore is quoted in several ways. Mortgages and savings accounts use effective annual rates, while car loans and many personal loans are advertised at flat rates that look much lower than their true cost. Banks must disclose the effective interest rate, and comparing on that basis gives a fair picture.
Related calculations
- CAGR Calculator: Calculates the compound annual growth rate between two values.
- ROI Calculator: Measures the return on an investment as a percentage.
- Inflation Calculator: Shows how inflation changes prices and purchasing power.
- Dividend Yield Calculator: Calculates dividend yield for SGX stocks and REITs.
Use the Fixed Deposit Calculator to plug in your own numbers.
Run your own numbers: Fixed Deposit Calculator