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RD Calculator

Calculate Recurring Deposit maturity amount

๐Ÿ‡ฎ๐Ÿ‡ณ Indian Rupee (โ‚น)
Monthly Deposit
โ‚น
Interest Rate 6.5%
% p.a.
Time Period 2 Yrs
Years
Maturity Amount
-
-
Total Deposited
-
Interest Earned

What is a Recurring Deposit (RD)?

Recurring Deposit is like an FD but instead of putting in a lump sum, you deposit a fixed amount every month for a fixed tenure. Its a disciplined savings tool โ€” perfect for people who want the safety of FD but dont have a large sum available upfront. Banks, post offices, and even many NBFCs offer RD accounts.

If you earn a monthly salary and want to build a corpus for a specific goal โ€” a vacation, phone upgrade, bike purchase โ€” RD is a clean, no-risk way to do it. The interest rate is fixed at the time of opening and doesnt change even if RBI changes rates later.

How is RD Maturity Amount Calculated?

M = R ร— [(1 + r/n)^(nt) - 1] / (1 - (1 + r/n)^(-1/3)) Simpler version used by most banks: Each monthly installment is treated as a separate deposit, and interest is calculated on each for the remaining tenure. Banks typically compound quarterly.

For example: โ‚น2,000 per month RD for 2 years (24 months) at 7% per annum:

Approximate maturity = โ‚น51,960 (total deposited = โ‚น48,000, interest earned โ‰ˆ โ‚น3,960)

RD vs SIP โ€” Which is Better for Monthly Investing?

This is a common question and the answer depends entirely on your goals and risk tolerance:

RD โ€” Guaranteed returns, completely safe, good for short to medium term goals (1โ€“5 years). Returns are modest (6โ€“7.5% currently). Interest fully taxable. No market risk whatsoever. Best for goals where you absolutely cannot take any risk.

SIP โ€” Market linked returns, higher potential (12โ€“15% historically in equity funds), but no guarantee. Tax efficient for long term. Best for long term goals of 5+ years where some volatility is acceptable.

For a childs school fees due in 2 years โ€” RD. For retirement planning 20 years away โ€” SIP wins easily.

Post Office RD โ€” A Good Alternative

India Post offers RD accounts that are very popular in semi-urban and rural areas. Currently offering around 6.7% per annum, compounded quarterly. The biggest advantage is that Post Office deposits are backed by the Government of India โ€” so there is zero credit risk unlike bank FDs which are only insured up to โ‚น5 lakh per bank.

FAQs

What happens if I miss an RD installment?
If you miss an installment, the bank charges a small penalty โ€” usually โ‚น1โ€“2 per โ‚น100 of the missed installment per month. If you miss installments continuously for 3โ€“6 months, the bank may close the account prematurely, and you will get a lower interest rate (usually savings account rate) on the amount deposited till then.
Is RD interest taxable?
Yes, RD interest is fully taxable just like FD interest. TDS is deducted if total interest across all deposits in a bank exceeds โ‚น40,000 per year (โ‚น50,000 for seniors). If your total income is below the exemption limit, you can submit Form 15G/15H to avoid TDS.
Can I get a loan against my RD?
Yes, most banks allow loans against RD, typically up to 80โ€“90% of the RD balance. Interest on such loans is usually 1โ€“2% above the RD rate. This is useful in emergencies โ€” instead of breaking the RD and losing interest, you can take a short term loan against it.
What is the minimum amount to open an RD?
Most banks allow RD with as little as โ‚น100 per month. Post Office RD minimum is โ‚น100 per month. There is usually no upper limit. Tenure typically ranges from 6 months to 10 years depending on the bank.