Is 444 days better than one year?

Usually yes on the headline rate, which is why banks offer it — but compare effective annual yields rather than the rates themselves. A 444-day deposit at 7.25% and a 365-day deposit at 7.10% are closer than they look once the extra 79 days are priced properly.

Why does my bank's maturity figure differ from an online calculator?

Almost always because the calculator applied a fractional exponent across the whole tenure instead of compounding completed quarters and adding simple interest on the residual days. The bank's figure is the correct one, and it is usually the slightly higher of the two — the shortcut understates. The difference is small on modest principals and grows in proportion to the amount.

Does the residual period compound?

No. Days after the last completed quarter earn simple interest on the accumulated balance. They never form a partial compounding period, however many of them there are — 89 residual days compound exactly as much as one does, which is not at all.

What if I break the deposit early?

Premature withdrawal is calculated at the rate applicable to the tenure actually completed, not the contracted rate, and usually carries a penalty of 0.5% to 1% on top. The compounding rules above still apply, but to the shorter tenure and the lower rate.

Is TDS deducted from the maturity value?

TDS is deducted from the interest, not the principal, and only above the annual threshold. It is a withholding rather than a final tax bill — if your total income is below the taxable limit you can reclaim it, or prevent it with Form 15G or 15H.

Savings & taxDepositsIndia

Why a 444-day FD is not the same as 15 months

Banks pick odd tenures because they are hard to compare. Interest compounds only on completed quarters, and the leftover days earn simple interest. Here is what that costs.

Ashish S KumarPublished 3 Sept 20265 min read

Banks in India love an odd tenure. 444 days, 555 days, 399 days — the headline rate on these is usually the best on the board, and the number is chosen precisely because it is awkward. Awkward tenures are hard to compare, and a tenure you cannot compare is a tenure you cannot shop around.

The awkwardness is not marketing. It comes from how deposit interest is actually credited, and almost every online calculator gets it wrong in the same way — by raising the rate to a fractional power across the whole tenure. That produces a number close enough to look right and wrong enough to matter. This is what actually happens, and what the difference comes to.

Interest compounds on completed quarters, not on time elapsed

A cumulative fixed deposit compounds quarterly. The word doing the work there is not “quarterly” but “completed”: interest is capitalised when a quarter finishes, and not before. Run a deposit for 89 days and no quarter has completed, so nothing has compounded.

What happens to the days left over is the part people miss. They are not ignored, and they do not compound either. The residual period — everything after the last completed quarter — earns simple interest on whatever the balance had grown to by then.

The same rate does not pay the same yield

That rule has a consequence you can act on. Because interest is only capitalised when a quarter closes, the return you actually earn per year depends on where your tenure ends relative to the next boundary — not just on the rate you were quoted.

What 7% actually yields, by tenure

Effective annual yield on a 7% deposit

A single 7% deposit, swept day by day. Every point is the same rate at the same bank. The same 7% headline rate does not return the same amount per year at every tenure. Yield jumps the day a quarter completes and then decays until the next one completes, because the deposit keeps earning simple interest on days that will never compound. Across 30 to 500 days the best tenure is 90 days at 7.289% and the worst is 366 days at 7.186% — the same rate, the same bank, a gap of 0.103 percentage points decided entirely by where the tenure lands.

Read it left to right. The yield falls steadily through a quarter, because each extra day adds simple interest to a balance that is not compounding yet — you are earning, but you are diluting the annualised figure. The moment the quarter closes, the compounded amount is banked and the yield leaps. Then the slide starts again.

The floor is at the whole years. At 365 days the yield is 7.186%, which is exactly what 7% compounded four times a year comes to, and no tenure in the range does worse. The peaks sit immediately after a quarter completes — 90 days returns 7.289%, the best on the chart, because a calendar quarter is 90 days while a quarter of a year is 91.25.

Which is the practical point about 444 days. For a deposit opened on 1 January, the fifth quarter closes on day 455 — so 444 days stops eleven days short of it. Holding those eleven extra days lifts the effective yield from 7.187% to 7.206%, a bigger gain than eleven days of interest would suggest, because it buys a whole quarter's compounding. Where that boundary falls depends on your start date, so it is worth checking rather than assuming.

Why most calculators get this wrong

Almost every online FD calculator skips the quarters entirely and raises the rate to a fractional power across the whole tenure. It produces a number close enough to look right and wrong enough to matter.

The direction of that error is the surprise. The shortcut does not flatter the deposit — it short-changes it. Raising the rate to a fractional power treats the leftover days as a partial compounding period, and a partial compounding period pays less than simple interest at the same rate. The banks' method is the more generous of the two, and the formula everyone uses quietly assumes otherwise.

Principal at 7%	Most the shortcut ever leaves out, over 444 days
₹1,00,000	about ₹34
₹10,00,000	about ₹340
₹1,00,00,000	about ₹3,400

There is one tenure where the shortcut is exactly right, and it explains the whole thing: a whole year. Its exponent is four times the tenure divided by 365, which at 365 days is four — precisely the number of quarters that have completed. Everywhere else the exponent is a fraction corresponding to nothing the bank actually does, and the error is not proportional to the tenure in any way you can eyeball.

How to compare two odd tenures honestly

Do not compare the headline rates and do not compare the maturity values, because the tenures differ. Compare the effective annual yield — what the deposit returns per year once the actual compounding schedule is applied. That is the only figure that puts 444 days and 555 days on the same footing.

1Work out the maturity value for each offer on its own real tenure, in days.
2Convert each to an effective annual yield rather than a total return.
3Only then compare. A higher headline rate over a longer odd tenure frequently loses.
4Check whether the interest is cumulative or paid out — a payout deposit does not compound at all.

If the deposit pays out interest rather than retaining it, none of the compounding above applies — see cumulative versus non-cumulative deposits for what changes.

Two things that are not what they look like

A leap year quietly changes the answer

Simple interest on the residual days is calculated as a fraction of the year, and that year is 366 days when February 29 falls inside it. A 444-day deposit opened in June 2027 and one opened in June 2028 do not mature at the same value, at the same rate, on the same principal.

The rate is annual, but nothing about the schedule is

A 7% rate does not mean 7% arrives at the end of the year. It means 1.75% is credited at each completed quarter. Four of those compound to about 7.19% — the effective annual yield — which is why the maturity value on a one-year deposit is slightly more than the headline rate suggests. That gap is real and it is in your favour. The fractional-exponent error is a separate thing and it is not.

Frequently asked questions

Is 444 days better than one year?: Usually yes on the headline rate, which is why banks offer it — but compare effective annual yields rather than the rates themselves. A 444-day deposit at 7.25% and a 365-day deposit at 7.10% are closer than they look once the extra 79 days are priced properly.
Why does my bank's maturity figure differ from an online calculator?: Almost always because the calculator applied a fractional exponent across the whole tenure instead of compounding completed quarters and adding simple interest on the residual days. The bank's figure is the correct one, and it is usually the slightly higher of the two — the shortcut understates. The difference is small on modest principals and grows in proportion to the amount.
Does the residual period compound?: No. Days after the last completed quarter earn simple interest on the accumulated balance. They never form a partial compounding period, however many of them there are — 89 residual days compound exactly as much as one does, which is not at all.
What if I break the deposit early?: Premature withdrawal is calculated at the rate applicable to the tenure actually completed, not the contracted rate, and usually carries a penalty of 0.5% to 1% on top. The compounding rules above still apply, but to the shorter tenure and the lower rate.
Is TDS deducted from the maturity value?: TDS is deducted from the interest, not the principal, and only above the annual threshold. It is a withholding rather than a final tax bill — if your total income is below the taxable limit you can reclaim it, or prevent it with Form 15G or 15H.