RD Calculator
Calculate Recurring Deposit maturity amount with quarterly compounding. See year-wise growth and interest earned.
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.
Guaranteed Returns
Rate is fixed at the time of opening. No market risk, no NAV fluctuation. Suitable for goals with a defined timeline where capital protection matters.
Zero market riskQuarterly Compounding
Each monthly installment is compounded quarterly for its individual remaining tenure. This calculator applies the correct per-installment formula, not a simplified average.
Senior Citizen Bonus
Most banks offer 0.5% higher RD rates to senior citizens (age 60+). Toggle the senior citizen option to see your effective rate and higher maturity amount.
+0.5% extraBank Rate Reference
Live bank RD rates from SBI, HDFC, ICICI, and Kotak are shown for reference so you can quickly pick a realistic rate before running your calculation.
RD Maturity - Quarterly Compounding per Installment
Maturity = Σ P × (1 + r/4)^(4 × t_n) for each installment n
P = monthly installment amount · r = annual interest rate as decimal (e.g. 0.065 for 6.5%) · t_n = remaining tenure in years for installment n (last installment: 1/12 yr, first installment: full tenure) · 4 = quarterly compounding periods per year · Each of the N monthly deposits earns interest for a different duration · Total maturity = sum of all N compounded installments
Worked Example
₹10,000/month RD for 3 years at 6.5% p.a. - saving for a car down payment
Total deposited = ₹3,60,000 · Maturity amount ≈ ₹3,97,400 · Interest earned ≈ ₹37,400 · Effective annual yield ≈ 6.65% (quarterly compounding effect)
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.
Why this matters for you
RDs occupy an important but often overlooked niche in the savings landscape: they are the only product that combines monthly savings discipline, guaranteed returns, and a fixed maturity date. For goals with a known timeline - a vacation, a vehicle down payment, an annual insurance premium, school admission fees - RDs are more appropriate than SIPs (market-linked, unpredictable at a specific date) and better than savings accounts (low interest, no discipline).
The quarterly compounding calculation catches many people off guard. A ₹5,000/month RD for 5 years at 7% does not simply earn 7% on ₹3 lakh (total deposited) - each monthly installment earns interest for a different remaining tenure, creating a compounding effect across 60 separate time periods. The actual maturity is notably higher than a naive estimate. This calculator applies the exact per-installment formula so your goal planning is based on accurate numbers, not rough approximations.
For risk-averse investors building an emergency fund or near-term goal corpus, the psychological certainty of an RD is genuinely valuable. Knowing that ₹8,000/month will become exactly ₹5.73 lakh in 5 years (at 6.5%) - regardless of stock markets, interest rate cycles, or economic conditions - allows confident financial planning that volatile instruments cannot provide. Certainty has real value when the goal is non-negotiable.
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Frequently Asked Questions
What is a Recurring Deposit and how does it work?+
A Recurring Deposit (RD) is a savings scheme where you commit to depositing a fixed amount every month for a chosen tenure (6 months to 10 years) at a guaranteed interest rate locked in at opening. Interest compounds quarterly on each installment for its individual remaining tenure. At maturity you receive all deposits plus accumulated interest in a single lump sum. Bank RDs are insured by DICGC up to ₹5 lakh per depositor per bank; Post Office RDs carry a full sovereign government guarantee with zero credit risk.
How is RD interest calculated?+
RD uses quarterly compounding applied individually to each monthly installment. Each deposit earns interest for a different remaining tenure: the first installment earns for the full period, the last earns for only 1 month. The formula per installment is: A = P × (1 + r/4)^(4t), where P is the monthly amount, r is the annual rate as a decimal, and t is the remaining tenure in years for that installment. Total maturity is the sum of all N compounded installment values. This is why the actual maturity is always higher than a naive estimate of P × N × r.
What is the current RD interest rate in India?+
RD rates move with the RBI repo rate cycle and vary by bank and tenure. Major bank RDs (SBI, HDFC, ICICI) currently range from approximately 5.9% to 6.5% p.a. for 1-3 year tenures. Post Office RD is reviewed quarterly by the government. Small Finance Banks (Jana, ESAF, Ujjivan) offer higher rates with commensurately higher risk. Senior citizens receive an additional 0.25-0.5% at most banks. Always verify the current rate on your bank's website before opening - rates change several times a year following RBI policy meetings.
Is RD interest taxable?+
Yes, RD interest is fully taxable as income. If total interest across bank accounts exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year, TDS at 10% is deducted. However, if your total annual income is below the taxable limit, submit Form 15G (or Form 15H for senior citizens) to your bank at the start of each financial year to prevent TDS deduction. Even if TDS is deducted, you must declare the interest in your ITR and claim credit for the TDS paid. There is no special exemption for RD interest - unlike PPF which is fully tax-free.
Can I withdraw an RD before maturity?+
Yes, premature closure is allowed at most banks after a minimum holding period of 3 months. The penalty is a 1% reduction from the rate applicable for the actual holding period - not the original contracted rate. Closing a 3-year RD after 18 months earns the 18-month rate minus 1%, not the 3-year rate. Some banks waive the penalty for tenures over 1 year or for senior citizens - check before opening. Post Office RDs allow premature closure after 3 years with a penalty. To preserve flexibility, open multiple smaller RDs of staggered tenures rather than one large RD, so you can close only what you need.
RD vs FD vs SIP - which is better for short-term goals?+
For goals under 3 years: RD beats SIP because equity markets may be down at your specific redemption date - you cannot afford sequence risk on a non-negotiable goal. RD vs FD depends on whether you have a lump sum now (use FD) or need to build the corpus monthly (use RD) - rates are similar. For tax efficiency, high-income investors in the 30% slab should compare RD post-tax returns (rate × 0.7) against arbitrage fund returns taxed at 12.5% LTCG after 1 year - arbitrage funds often win. For investors in the 5% or 20% slab, RD is almost always more efficient than debt funds for sub-3-year goals since April 2023 (when debt STCG moved to slab-rate taxation).
What is a senior citizen RD and what extra benefit does it offer?+
Most banks offer a 0.25 to 0.5% higher interest rate on RDs specifically for senior citizens (aged 60 or above). For example, if the regular RD rate is 6.5% for a 2-year tenure, senior citizens may get 7.0%. This applies to RDs opened either by the senior citizen themselves or by a joint holder where the senior citizen is the primary holder. Senior citizens also get a higher TDS exemption threshold - Rs. 50,000 annual interest (versus Rs. 40,000 for regular investors) before TDS is deducted. For regular monthly income needs in retirement, a senior citizen RD combined with a cumulative FD (for lump-sum goals) and SCSS (Senior Citizen Savings Scheme, currently 8.2% for 5 years) is a conservative low-risk income strategy.