RD Parameters
Maturity Amount
₹0Total Invested
₹0
Wealth Gain (Interest)
₹0
Effective Annual Yield
0%
Compounding
QuarterlyWhat is a Recurring Deposit (RD)?
A Recurring Deposit (RD) is a special type of term deposit offered by banks and post offices in India that allows individuals to save a fixed amount of money every month for a specific period. It is designed to encourage a habit of regular savings among people with a fixed monthly income.
Unlike a Fixed Deposit (FD), where you invest a lump sum once, an RD allows you to build your savings month by month. The interest rate on an RD is usually the same as that of an FD, providing a guaranteed and safe return on your investment.
How an RD Works
When you open an RD account, you commit to depositing a fixed amount (e.g., ₹5,000) every month for a chosen tenure (e.g., 5 years). Each monthly installment earns interest from the date of deposit until the end of the tenure.
In India, most banks calculate RD interest on a quarterly compounding basis. This means the interest you earn in one quarter is added to your principal for the next quarter's calculation. Post Office RDs also follow specific quarterly compounding rules, usually with a fixed 5-year tenure.
RD vs FD vs SIP: Which is better?
| Feature | Recurring Deposit (RD) | Fixed Deposit (FD) | SIP (Mutual Funds) |
|---|---|---|---|
| Investment Style | Monthly installments | One-time lump sum | Monthly installments |
| Returns | Guaranteed (Fixed) | Guaranteed (Fixed) | Market-Linked (Higher Potential) |
| Risk | Low / Nil | Low / Nil | Moderate to High |
| Tax on Interest | Taxed at Income Slab | Taxed at Income Slab | Capital Gains Tax |
RD Interest Calculation Formula
The calculation of RD maturity amount is slightly more complex than a simple FD because the first installment earns interest for the full tenure, while the last installment earns interest for only one month. The formula used is:
- M: Maturity value
- P: Monthly installment
- n: Number of quarters
- i: Rate of interest / 400
For ease of use, our calculator uses an iterative monthly loop that accurately sums up the future value of every single deposit based on its remaining time in the account.
How to Maximize Your RD Returns
Senior Citizen Benefit
Most Indian banks offer an additional interest rate of 0.50% to 0.75% for senior citizens (above 60 years). Always mention the age correctly to get higher returns.
TDS Management
If your total interest from RDs/FDs is below the taxable limit, submit Form 15G/15H to your bank to avoid TDS (Tax Deducted at Source) of 10%.
Frequently Asked Questions
What is the minimum RD tenure?
Can RD be withdrawn early?
Which bank gives the highest RD interest rate?
Is RD better than SIP for short term?
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Disclaimer
RD interest rates vary across different banks and post office schemes. These calculations are illustrative based on standard quarterly compounding math. Please consult your bank branch for exact maturity figures and TDS applicability.Last Updated: March 2026