Don’t Get Confused With Bank FD Calculation


Here, I won’t share with you about shares and mutual fund because those are more for investing while FD is strictly for savings purposes. But, how do we count the total gain from fixed deposit for a year?

Lets say you put 10k FD for 1 year at 3.70%(p.a) which is regulated by central bank. Then at the end of the year you can get $10370.

** Take note that if you withdraw before the maturity date, you won’t get the full interest.

If monthly basis (1 month) with 3.0% interest rate, then you’ll get $300 divided by 12 months. If you add up the interest into your FD automatically, the next calculation will be based on your total FD. So, you can enjoy more as the powerful of compounding interest.

Based on my previous survey, I noticed that some bank may offer higher rate but very rare to exceed 4% p.a. and it depends on:

i)How much you want to deposit ?
ii)How long you want to keep for ?
iii)Are you a senior citizen ?

On the other hand, there’s also Islamic FD will offer higher rate; may be 4% p.a (but still < 4.5% p.a). However, there’s a profit sharing ratio and before committing into it, better check it with the bank. I believe BSN and Bank Rakyat are highly promoting this product.

13 thoughts on “Don’t Get Confused With Bank FD Calculation”

  1. You’re technically right, David, but in your example of monthly-compounded FD, your annual interest rate is

    (1 + 0.03/12)^12 – 1

    or 3.04%, so if you invest 10k, your interest will amount to 304 by the end of the year. If you like to work through it month by month, your 10k will attract one twelfth of 300 = 25 in the first month. You re-deposit 10,025 and in the second month get 25 interest on 10,000 plus one twelfth of 3% of 25, or about 6 cents. It gets only slightly better after that.

    Compounded gains are the best kind, and some of the deposit-takers’ advertising might take advantage of the fact that, though simple, the compound interest calculation is more laborious than most people can be bothered with. Those same people do know that frequent compounding is ‘a good thing’.

    If you’re planning to deposit a large amount of money, it may be worthwhile to spend some time with a calculator. If you’re keen to take advantage of frequent compounding, make sure you calculator has a x^y button! In fact, that monthly FD is not a 3% deposit, it’s a 0.25% deposit – doesn’t look so good when you read it like that, does it?

  2. Yes, u r right. But nowadays banks offer many different savings package. I’m now studying the Foreign Currency Saving Deposit. U have any info for that?

  3. Saving in bank FD will not solve the inflation issue!!! how about if saving in more higher interest rate place?? any to suggest? saving in ASM/ASN/ASB can be considered as saving or investing?

  4. Please do not do saving..but use those money to buy something that can generate more money in future..u should do market survey alot on it…

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  6. im kind of confused here…now the rate for 2 month FD is 3%. wat if i place RM1000 for 2 months FD..wat would be the total interest i received after 2?

  7. I’m strongly suggest keep saving some amount for emergency use and the others look for investment. Bank saving and FD deposit might not overcome the inflation.

  8. IS it the calculation is like this

    10k – 2% (FD Rate for 1 month) = RM200 <–earning

    Is that correct? if wrong how to calculate it in correct way, Sean or anyone? show it mathematical way

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