How is interest calculated on overdraft against fixed deposit ?

POSTED BY vinay100 ON November 2, 2013 9:01 am ONE COMMENT

Hi sir,

I would like to know how interest is calculated on over draft against fixed deposit

say for example

i have an fixed deposit of 1 lakh and getting an interest at 10% per annum, I have opted for montly mode where the interest is paid on a montly basis.I got an OD of Rs 90,000 on this and the interest will be 2% extra .

as i see that the interest is calculated on a daily basis and end of the month i get to know the interest amount. so if dont pay the interest for one month will this interest get added up into the principle amount ? will the next month interest is calculated along with the interest of previous month included with the principle? please clarify thank u sir

One reply on this article “How is interest calculated on overdraft against fixed deposit ?”

  1. ashalanshu says:

    Dear Vinay, yes, 1st month’s due interest ‘ll be addedup into next month’s principal and thus you ‘ll pay interest on interest in next month OD calculation.

    thanks

    Ashal

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