ganak.appRD Calculator
Calculate Recurring Deposit (RD) maturity amount, total interest earned, and month-by-month growth. Compare RD returns across Indian banks, plan for short-term savings goals, and understand compounding benefits. Perfect for disciplined monthly savings, building emergency funds, and achieving specific financial targets.
Yearly RD Growth
See how your RD grows year by year
| Year | Investment | Interest Earned | Closing Balance |
|---|---|---|---|
| 1 | ₹60,000 | ₹2,143 | ₹62,143 |
| 2 | ₹1,20,000 | ₹6,282 | ₹1,28,425 |
| 3 | ₹1,80,000 | ₹10,697 | ₹1,99,122 |
| 4 | ₹2,40,000 | ₹15,405 | ₹2,74,527 |
| 5 | ₹3,00,000 | ₹20,427 | ₹3,54,954 |
What is a Recurring Deposit (RD)?
A monthly savings scheme with guaranteed bank returns
A Recurring Deposit (RD) is a popular savings scheme offered by banks in India where you invest a fixed amount every month for a predetermined tenure. Unlike Fixed Deposits which require a lump sum, RDs help you build savings gradually through regular monthly contributions.
In India, bank RDs are generally structured as cumulative deposits, where interest is reinvested and paid with principal at maturity. Confirm product terms with your bank.
- Fixed monthly investment: Deposit the same amount every month
- Tenure: Typically 6 months to 10 years
- Guaranteed returns: Interest rate is fixed at account opening
- Cumulative only: No periodic payouts — everything at maturity
- Taxable: Interest earned is fully taxable as per your income tax slab
How RD Interest is Calculated in India
Quarterly compounding on each monthly installment
RD interest is calculated using compound interest, typically compounded quarterly (most banks) or monthly. Each monthly deposit earns interest from its deposit date until maturity.
Conceptual Formula:
Maturity = Sum of [P × (1 + r/n)^(n × t)] for each installmentP = Monthly deposit amount
r = Annual interest rate (decimal)
n = Compounding frequency (4 for quarterly, 12 for monthly)
t = Time remaining for each installment to mature (in years)
Unlike FD where you compound a single amount, RD treats each monthly installment as a separate deposit that compounds for a different duration. The first installment compounds for the full tenure, while the last installment compounds for only one month (or less).
RD Example
A 5-year RD worked calculation at 7% interest
Example Calculation:
Suppose you invest ₹5,000 per month in an RD at 7% p.a. for 5 years (60 months), compounded quarterly:
- Monthly Deposit: ₹5,000
- Total Investment: ₹3,00,000 (5,000 × 60)
- Interest Rate: 7% p.a.
- Tenure: 5 years (60 months)
Using the RD calculator:
- Maturity amount: approx ₹3,60,000
- Total interest earned: approx ₹60,000
How to Maximise Your RD Returns
Rates, tenure, timing, and senior citizen benefits
1. Choose a Higher Interest Rate
Compare rates across banks. Even a 0.25% difference can significantly impact your maturity amount over a longer tenure. Small finance banks often offer higher RD rates.
2. Opt for Longer Tenure
Longer tenures allow more time for compounding. A 10-year RD will earn significantly more interest per rupee invested than a 1-year RD at the same rate.
3. Deposit at Start of Month
If possible, configure your RD to debit at the start of the month rather than end. This gives each installment an extra month of compounding, slightly increasing your maturity amount.
4. Senior Citizen Benefits
Senior citizens typically get 0.25% to 0.50% higher interest on RDs. If you're 60+, make sure to avail this benefit.
5. Avoid Missing Installments
Missing installments can result in penalties and may even lead to premature closure. Set up auto-debit to ensure timely payments.
RD vs FD vs SIP
Choosing the right savings or investment vehicle
| Feature | RD | FD | SIP |
|---|---|---|---|
| Investment Type | Monthly recurring | Lump sum | Monthly recurring |
| Returns | Fixed, guaranteed | Fixed, guaranteed | Market-linked, variable |
| Risk | Very low | Very low | Moderate to high |
| Ideal For | Building savings gradually | Parking surplus funds | Long-term wealth creation |
| Liquidity | Moderate (with penalty) | Moderate (with penalty) | High |
| Tax on Returns | Fully taxable | Fully taxable | LTCG/STCG rules apply |
RD is ideal for disciplined monthly savings with guaranteed returns.
FD is better if you have a lump sum to invest.
SIP offers potentially higher returns but with market risk.
Taxation of RD Interest
TDS thresholds, slab rates, and Form 15G/15H
RD interest is fully taxable as per your income tax slab. It is added to your total income and taxed accordingly.
TDS on RD Interest:
- Banks deduct TDS at 10% when your total interest from all deposits crosses the applicable Section 194A threshold — currently ₹50,000 for most depositors and ₹1,00,000 for senior citizens (verify with the latest Finance Act)
- If PAN is not provided, TDS is deducted at 20% under Section 206AA
- You can submit Form 15G/15H to avoid TDS if your total income is below taxable limits
Interest is taxable on an accrual basis — meaning you may need to pay tax on interest earned each year, even though you receive it only at maturity.
Premature RD Closure
Penalties, reduced rates, and how to avoid early withdrawal
Breaking an RD before maturity comes with consequences. Banks typically apply penalties and may reduce the applicable interest rate.
What happens on premature closure:
- Interest is recalculated at a lower rate (typically the rate applicable for the actual period held)
- Penalty rates vary by bank and tenure; many banks apply a reduction around 0.5% to 1%, but check your bank's schedule
- Your actual returns will be significantly lower than estimated
- Some banks may have a minimum lock-in period before premature closure is allowed
Tip: Consider the RD tenure carefully before starting. If you might need the money early, keep an emergency fund separate or choose a shorter tenure.
Frequently Asked Questions
Common questions about recurring deposits, returns, and maturity