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