RD Calculator

About the RD Calculator

A Recurring Deposit (RD) is the savings product that combines the monthly discipline of a SIP with the guaranteed returns of a Fixed Deposit. You commit a fixed amount every month for a chosen tenure - anywhere from 6 months to 10 years - and the bank compounds your interest quarterly. At maturity you receive the total deposited amount plus interest in a single payout. Unlike a SIP, there is no market risk: the rate is locked in on day one.

RDs are built for specific goals with a known timeline - a vehicle down payment in 2 years, a wedding fund in 3 years, a child's school fee reserve, or an annual family vacation budget. The forced-saving structure makes them especially useful for people who struggle to leave lump sums untouched. Post Office RDs carry sovereign guarantee (zero credit risk); bank RDs are covered by DICGC insurance up to ₹5 lakh per depositor per bank.

This calculator uses the correct quarterly compounding formula applied to each monthly installment individually - not a simplified approximation. The year-wise breakdown shows your cumulative deposit and balance at each milestone, so you can confirm the corpus at exactly the point you need the money.

RD Maturity - Quarterly Compounding per Installment

Worked Example

Tips & Insights

• 1

  Post Office RD carries sovereign guarantee - backed by the Government of India with zero credit risk. Bank RDs are covered by DICGC deposit insurance up to ₹5 lakh per depositor per bank. For amounts above ₹5 lakh, spread across multiple banks or use Post Office RD for the excess.

• 2

  RD interest is fully taxable as 'income from other sources'. If your total interest from all bank deposits in a financial year exceeds ₹40,000 (₹50,000 for senior citizens), TDS at 10% is deducted. If your total income is below the taxable limit, submit Form 15G (or 15H for seniors) to your bank at the start of each financial year to prevent TDS.

• 3

  Missing an RD installment triggers a default penalty - typically ₹1.50 to ₹2 per ₹100 per month for the delayed amount. Most banks allow a grace period of a few days. Repeated defaults can lead to the account being treated as a premature closure. Set up an auto-debit or standing instruction to the RD account to avoid this.

• 4

  Premature closure penalty is usually 1% below the rate applicable for the actual holding period. For example, closing a 3-year RD after 18 months earns the 1-year rate minus 1%, not the 3-year rate. If you anticipate needing the money earlier, open multiple smaller RDs of different tenures instead of one large RD.

• 5

  Senior citizens get 0.5% extra on most bank RDs (age 60+). On a ₹10,000/month RD for 5 years, 0.5% extra rate translates to approximately ₹8,000-₹9,000 more at maturity. Always open RDs in the senior family member's name when possible to capture this benefit.

• 6

  For tax efficiency, consider opening RDs in the name of a spouse or parent who is in a lower tax bracket. Interest earned is taxed as their income. A parent with no other income pays zero tax on RD interest up to ₹3 lakh/year (₹5L for seniors with Section 80TTB). Family income splitting through RDs is completely legal.

• 7

  Compare RD vs recurring SIP in liquid funds for the same tenure. For investors in the 30% tax bracket, liquid fund returns of 6.5-7% p.a. are taxed at 30% (short-term), making post-tax returns close to RD. For investors in the 5% or 20% slab, RD is typically more efficient for tenures under 3 years because debt fund STCG is taxed at slab rates since April 2023.

• 8

  Use an RD as a replacement for the 'spending account' trap. Instead of leaving salary surplus in a savings account earning 2.5-3%, move it into an RD the day after salary credit. The RD constraint discourages impulsive spending while earning 6-7% vs 3% on savings accounts - a 3-4% annual improvement on typically ₹50,000-₹2 lakh sitting idle.