Recurring Deposit Calculator
See how your monthly savings grow over time. Estimate maturity value, compare scenarios, and understand how disciplined saving builds long-term wealth.
Savings Details
Applies additional interest rate (typically +0.50%)
RD Growth vs Deposits
Deposits vs Interest
Smart Insights
Explore how different factors affect your Recurring Deposit returns
Year-wise Growth Timeline
Watch your RD grow year by year
Year-wise Growth Table
Complete year-by-year breakdown of your Recurring Deposit
| Year | Opening Balance | Yearly Deposit | Interest Earned | Closing Balance | Cumulative Interest |
|---|
Understanding Recurring Deposits
What is a Recurring Deposit?
A Recurring Deposit (RD) is a savings product offered by banks and financial institutions where you deposit a fixed amount every month for a predetermined period. Unlike a lump-sum Fixed Deposit, an RD helps you build a savings habit by investing smaller amounts regularly. At maturity, you receive the total deposits plus accumulated interest — making it ideal for salaried individuals and those building a savings discipline.
How RD Interest is Calculated
RD interest is calculated using a formula that accounts for monthly deposits and quarterly compounding (for most banks): M = R × [(1 + i)^n − 1] / [1 − (1 + i)^(−1/3)], where R is the monthly deposit, i is the quarterly interest rate, and n is the number of quarters. Each monthly installment earns interest from its deposit date, and interest is compounded at regular intervals — usually quarterly. The effective annual yield can differ from the stated rate depending on compounding frequency.
RD vs FD: Key Differences
- Investment Pattern: RD involves monthly installments; FD requires a one-time lump sum.
- Accessibility: RD is more accessible for regular income earners; FD needs accumulated capital upfront.
- Interest Earnings: FD compounds on the full amount from day one; RD compounds each installment as it's deposited.
- Tenure: RD typically ranges from 6 months to 10 years; FD can be as short as 7 days.
- Savings Habit: RD builds financial discipline through forced regular savings.
Benefits of RD
- Disciplined Savings: Automatic monthly deductions build a consistent savings habit.
- Guaranteed Returns: Fixed interest rate with no market risk or volatility.
- Low Entry Barrier: Start with as little as ₹100 per month.
- Flexible Tenure: Choose from 6 months to 10 years based on your goals.
- Loan Facility: Use RD as collateral for loans (up to 90% of balance).
- Compounding Benefit: Interest earns interest, accelerating wealth growth.
Risks and Limitations
- Inflation Risk: Fixed returns may not outpace inflation over long periods.
- Interest Rate Risk: Locking at current rates means missing future rate increases.
- Penalty on Missed Deposits: Skipping a payment may incur penalties or reduce interest.
- Premature Closure Penalty: Breaking an RD early usually means lower interest rates.
- Lower Returns than Market: RDs offer safety but typically lower returns than equity or mutual funds.
Taxation of RD
Interest earned on RDs is fully taxable as per your income tax slab. TDS (Tax Deducted at Source) is applicable if total interest exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). TDS is deducted at 10% (or 20% without PAN). You can submit Form 15G/15H to avoid TDS if your total income is below the taxable limit. The interest is added to your total income and taxed at your applicable slab rate.
Premature Withdrawal
Most banks allow premature closure of RDs but at a reduced interest rate — typically 1-2% lower than the contracted rate. Some institutions also charge a penalty (around 0.5% of the deposit amount). The actual interest paid is calculated at the rate applicable for the period the RD was actually held. It's generally advisable to complete the full tenure to maximize returns and avoid penalties.
Who Should Invest in RD?
- Salaried Individuals: Perfect for those who can save a fixed amount from monthly income.
- Risk-Averse Investors: Ideal for those who prioritize capital safety over high returns.
- Short to Medium Term Goals: Great for funding vacations, gadgets, weddings, or down payments.
- Students and Young Earners: Build savings discipline with small, manageable installments.
- Retirees: Senior citizen RDs offer higher rates for regular income through periodic payouts.
Frequently Asked Questions
What is the minimum deposit for an RD?
Most banks offer RDs with a minimum monthly deposit of ₹100 to ₹500. Some institutions may have higher minimums for specific tenures or special schemes. Premium or digital-only banks may offer even lower entry points.
Can I change my monthly deposit amount?
Most RDs have a fixed monthly deposit that cannot be changed mid-tenure. However, some banks offer flexible RDs that allow you to increase or decrease the installment amount. Some also allow a grace period of a few days for late deposits without penalty.
What happens if I miss a monthly deposit?
Missing a monthly deposit typically results in a penalty — usually a fixed fee or reduced interest rate on the entire RD. Most banks allow a grace period of 2-15 days. If too many installments are missed, the RD may be converted to a savings account or closed prematurely.
Can I have multiple RDs at the same time?
Yes, you can open multiple RDs with the same bank or across different banks. This can be useful for goal-based saving — for example, separate RDs for vacation, emergency fund, and a down payment.
Is RD better than a Savings Account?
RDs offer significantly higher interest rates (typically 4-8%) compared to savings accounts (2.5-4%). If you don't need immediate access to the money, an RD is a better option for earning higher returns while building a savings habit. However, savings accounts offer instant liquidity.
What is the interest rate for senior citizens?
Most banks offer 0.25% to 0.75% higher interest rates to senior citizens (60 years and above) on RDs. Some banks have even higher rates for very senior citizens (80+ years). The exact premium varies by bank and tenure.
How is RD interest taxed?
RD interest is added to your total income and taxed as per your income tax slab. Banks deduct TDS at 10% if total interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year. Submit Form 15G/15H if your total income is below the taxable limit to avoid TDS.
Can I take a loan against my RD?
Yes, most banks offer loans against RDs at attractive interest rates (typically 1-2% above the RD rate). You can get up to 90% of the RD balance as a loan while the RD continues to earn interest. This can be useful for emergency funding needs.