is fixed deposit and compound interest same?
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You can deposit a sum of money called principal with the bank for a fixed time period (tenure). The deposit will earn interest during this period. ... With simple interest, interest is earned only on the principal amount. With compound interest, the interest is earned on the principal as well as the interest.
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Usually, the interest for FD with a period of 6 months or less is calculated at simple interest. Compounding of interest is done for FDs with a term period of more than 6 months. When going for monthly interest payout, banks mostly calculate interest on discounted rates.
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