About the RD Calculator
A recurring deposit (RD) lets you deposit a fixed amount every month for a chosen period and earn interest at a rate fixed when the account is opened. This RD calculator estimates the maturity amount, the total you deposit and the interest earned, using the quarterly compounding method that Indian banks generally apply to recurring deposits.
RDs suit people who want to build a sum from monthly income without market risk: salaried savers, homemakers, small traders setting aside part of their collections, and anyone saving for a known expense such as school fees, an insurance premium or a piece of equipment. The calculator helps you decide how much to set aside each month to have the amount ready on time.
The maturity value depends on the monthly instalment, the interest rate and the number of months. Each instalment earns interest only for the time it stays in the account, so the first deposit earns the most and the last earns the least. This is why interest on an RD is lower than on a fixed deposit of the same total amount placed on day one. Interest is taxable.
How to use it
- 1Enter the amount you will deposit every month.
- 2Enter the annual interest rate offered for the tenure.
- 3Enter the tenure in months, for example 60 for five years.
- 4Read the maturity amount, the total deposited and the interest earned.
How this is calculated
M = Σ P × (1 + r ÷ 4)^(4 × t) P = monthly instalment, r = annual interest rate ÷ 100, t = time each instalment stays invested, in years (remaining months ÷ 12). The first instalment stays for the full tenure and the last for one month. Adding up every instalment, each compounded quarterly, gives the maturity value M.
Frequently asked questions
How is RD interest calculated?
Banks generally compound RD interest quarterly. Each monthly instalment is treated like a small fixed deposit that runs from its deposit date to the maturity date, and the maturity value is the total of all of them. The calculator adds up every instalment using this method, so the first instalment earns interest for the full tenure.
What is the minimum and maximum tenure for an RD?
Banks typically offer recurring deposits from six months up to ten years, in multiples of months or quarters. The Post Office recurring deposit has a fixed five-year term that can be extended. Tenure options and minimum instalments differ between institutions, so check with your bank or post office before opening the account.
Is RD interest taxable?
Yes. RD interest is taxed at your income tax slab rate, and tax is deducted at source when your interest income from the bank crosses the prevailing threshold in a financial year. There is no tax deduction for investing in an ordinary RD. The figures shown by the calculator are before tax.
What happens if I miss an RD instalment?
Banks usually charge a small penalty for each delayed instalment, and repeated defaults can lead to the account being closed, with interest paid at a reduced rate. A standing instruction from your savings account, on a date just after your income arrives, is the simplest way to avoid missed payments.
RD or SIP — which should I choose?
An RD gives a fixed, known return and suits short-term goals or money you cannot afford to put at risk. A mutual fund SIP is market-linked: it has higher long-term potential, but the value can fall in the short term. Many savers use RDs for goals within three years and SIPs for longer ones.