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RD Calculator

Estimate your Recurring Deposit maturity value and interest earned — free, instant, no signup required.

Recurring Deposit Calculator
Maturity Value
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Total Invested
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Total Interest
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What is a Recurring Deposit (RD)?

A Recurring Deposit (RD) is a savings scheme offered by banks and post offices that allows you to deposit a fixed amount every month for a chosen tenure and earn interest on the accumulated balance. At the end of the tenure, you receive the total deposited amount along with the interest earned — the maturity value.

RD is an excellent tool for building a savings habit, especially for individuals with a regular monthly income who want to set aside a fixed sum systematically. Unlike a Fixed Deposit where you invest a lump sum, an RD lets you start with as little as ₹100 per month and grow your savings incrementally.

RD Calculation Formula

Banks in India calculate RD maturity using quarterly compounding. Each monthly instalment earns interest from the date of deposit until maturity. The formula is:

M = ∑ (for each instalment i from 1 to N): D × (1 + r/(4×100))^(4×(N−i)/12)

Where:
  M = Maturity value (₹)
  D = Monthly deposit amount (₹)
  r = Annual interest rate (%)
  N = Total tenure in months
  i = Month number of deposit (1 to N)

Each deposit earns quarterly compound interest for the remaining months in the tenure. The first deposit (i=1) earns interest for (N-1) months, the second for (N-2) months, and so on. The last deposit earns interest for 0 months (i.e., its face value is added directly).

RD vs FD — Key Differences

  • Investment pattern: RD requires monthly deposits of a fixed amount, while FD requires a single lump sum investment at the start.
  • Minimum amount: RD can be opened with as little as ₹100 per month. FD minimum is typically ₹1,000 or ₹5,000 depending on the bank.
  • Interest rate: RD and FD of the same tenure typically offer the same interest rate at most banks. Post office RDs currently offer 6.7% p.a., which is lower than their 5-year FD rate of 7.5%.
  • Flexibility: FD allows you to invest a large sum when you have surplus money. RD helps you invest systematically from your monthly income without needing a large corpus upfront.
  • Loan against RD: Many banks offer loans against RDs (up to 80–90% of the deposit value), similar to FDs.

Tax on RD Interest

Like FD interest, RD interest is fully taxable. It is added to your annual taxable income under "income from other sources" and taxed at your applicable income tax slab rate. Key points:

  • TDS: Banks deduct TDS at 10% (20% without PAN) if the total interest on RDs and FDs from a single bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). Post offices do not deduct TDS on RD interest.
  • Interest accrual: Even for multi-year RDs, interest is deemed to accrue each year and should ideally be declared in the income tax return each year, though many taxpayers declare it at maturity.
  • No Section 80C benefit: Unlike tax-saving FDs, RD investments do not qualify for Section 80C deduction.

Premature Withdrawal of RD

Most banks allow premature closure of an RD account, subject to a penalty — usually 1% below the applicable rate for the actual duration held. The post office RD does not allow premature closure before completing 3 years, and after 3 years, premature closure is allowed with a penalty. Some banks also allow a temporary pause or a loan against the RD rather than closing it prematurely.

Advantages of RD

  • Builds saving discipline: The mandatory monthly deposit instils a habit of regular saving, making it one of the best tools for disciplined long-term saving.
  • Low entry barrier: You can start an RD with as little as ₹100 per month, making it accessible even on a tight budget.
  • Guaranteed returns: The interest rate is fixed at the time of opening, so you know exactly how much you will receive at maturity — there is no market risk.
  • DICGC insurance: Bank RDs, like FDs, are covered under DICGC insurance up to ₹5 lakh per depositor per bank.
  • Post office RD: Post office RDs are backed by the sovereign guarantee of the Government of India, making them one of the safest savings instruments available even in rural and semi-urban areas.

Frequently Asked Questions

The minimum monthly deposit for a bank RD varies by bank but is typically ₹100 to ₹500 per month, with deposits in multiples of ₹100. Post office RDs can be opened with as little as ₹100 per month. There is no upper limit on RD deposits, though higher amounts attract TDS consideration. The simplicity and low minimum make RDs accessible to a wide range of savers, including students and those with limited monthly surpluses.
If you miss an RD instalment, most banks levy a penalty for each month of default. The penalty is typically ₹1 to ₹2 per ₹100 of the monthly instalment per month of default. If you miss multiple instalments, the bank may convert the RD to a savings deposit or close the account, crediting the balance (minus penalties) to your savings account. It is advisable to maintain sufficient balance in the linked savings account for auto-debit to avoid default penalties. Post office RDs allow a maximum of 4 defaults before the account is discontinued.
It depends on your risk appetite and investment horizon. RD offers guaranteed, fixed returns (currently 6.5%–7.5% for most banks) with no market risk — ideal for short-term goals (1–5 years) or for risk-averse investors. SIP (Systematic Investment Plan in mutual funds) carries market risk but has historically delivered 10%–14% CAGR over long horizons (7+ years) in equity mutual funds. For goals 5+ years away, SIPs typically outperform RDs significantly over the long term. For emergency funds, near-term goals (home down payment, a vacation), or conservative investors, RD is a better choice. Many financial planners suggest using both — RD for near-term security and SIP for long-term wealth creation.
Yes. Most banks offer loans or overdraft facilities against RD accounts, typically up to 80%–90% of the amount deposited so far (not the future maturity value). The interest rate on the loan is usually 1%–2% above the RD interest rate. This is a useful feature if you have a temporary cash crunch but do not want to prematurely close your RD and lose the accrued interest. Post office RDs also allow a single loan of up to 50% of the deposited amount after 12 monthly instalments.