Total invested
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Interest earned
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Maturity amount
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Worked Examples
See how RD maturity is calculated using quarterly compounding (standard for Indian banks).
Example 1: 5-Year RD with ₹5,000/month
Scenario: Deposit ₹5,000 every month for 5 years at 6.5% p.a. interest (quarterly compounding)
• Monthly deposit = ₹5,000
• Interest rate = 6.5% p.a.
• Tenure = 5 years (60 months)
• Compounding = Quarterly (i = 6.5/400 = 0.01625)
Calculation:
Total deposited = ₹5,000 × 60 = ₹3,00,000
Using RD formula: M = 5,000 × [(1.01625^60 - 1) / (1 - 1.01625^(-1/3))]
Maturity = ₹3,51,863
Interest earned = ₹3,51,863 - ₹3,00,000 = ₹51,863
Example 2: 3-Year RD with Senior Citizen Rate
Scenario: Senior citizen deposits ₹10,000/month for 3 years at 7% p.a.
• Monthly deposit = ₹10,000
• Interest rate = 7% p.a. (senior citizen benefit)
• Tenure = 3 years (36 months)
• i = 7/400 = 0.0175
Total deposited = ₹10,000 × 36 = ₹3,60,000
Maturity = ₹10,000 × [(1.0175^36 - 1) / (1 - 1.0175^(-1/3))]
Maturity = ₹3,99,666
Interest earned = ₹39,666
Example 3: Short-Term RD (1 Year)
Scenario: Save ₹2,000/month for 1 year at 6% p.a.
• Monthly deposit = ₹2,000
• Interest rate = 6% p.a.
• Tenure = 1 year (12 months)
• i = 6/400 = 0.015
Total deposited = ₹2,000 × 12 = ₹24,000
Maturity = ₹2,000 × [(1.015^12 - 1) / (1 - 1.015^(-1/3))]
Maturity = ₹24,776
Interest earned = ₹776
Common Mistakes to Avoid
Missing monthly deposits
If you skip even one monthly deposit, the RD becomes irregular and banks may reduce the interest rate or apply penalties. Some banks allow a grace period (typically 1-2 months), but repeated misses can lead to account closure. Set up auto-debit from your salary account to avoid missing deposits.
Choosing RD when you have a lump sum
RDs are for disciplined monthly savings. If you already have a lump sum (e.g., ₹6L), an FD will earn more than depositing ₹10k/month for 5 years because the entire ₹6L earns interest from day one. Use RD for building a corpus from salary/income, not for parking existing savings.
Premature withdrawal without checking penalty
Breaking an RD before maturity attracts a penalty (typically 1% reduction in interest rate) and you lose the compounding benefit. If you close a 5-year RD after 2 years, you may get 5.5% instead of 6.5% on the 2-year period. Plan your tenure based on when you actually need the money.
Not comparing bank vs post office RD rates
Post Office RDs often offer 0.25-0.5% higher rates than banks. As of Q3 2024, Post Office RD was offering 6.7% vs 6-6.5% at most banks. For a ₹5,000/month RD over 5 years, 0.5% higher rate means about ₹4,000 more interest. Compare rates before opening an RD.
Forgetting about TDS on interest
Banks deduct 10% TDS if your total interest income (FDs + RDs combined) exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G/15H if you have no tax liability. RD interest is fully taxable as per your income tax slab, so factor in post-tax returns when planning.
Opening too many small RDs
Opening five ₹1,000 RDs is harder to track than one ₹5,000 RD. More accounts = more paperwork, more chances of missing deposits, and no benefit in returns. Consolidate your savings into one or two RDs. Use multiple RDs only for staggered maturity dates (laddering strategy).
Not adding a nominee
Without a nominee, your family will need legal succession documents to claim your RD maturity, which can take months. Add a nominee when opening the RD or update it later at your branch. It ensures fast claim settlement for your family.
Using RD for long-term wealth creation
RDs earn 6-7% pre-tax, which after tax and inflation leaves little real return. For goals beyond 5 years (retirement, child education), equity mutual funds via SIP historically offer 10-12% CAGR. Use RDs for short-term goals (1-5 years) or as an emergency fund, not as your primary long-term investment.
Updated: October 2026
Source: Reserve Bank of India (RBI), India Post, and major bank websites
Example rates: As of October 2026, banks offered 6-6.5% p.a., Post Office 6.7% for 5-year RDs. Senior citizens may get 0.25-0.5% higher. Rates vary by institution and tenure. Always check current rates before opening an account.
Note: RD rates change quarterly. This calculator is for estimation only.
What is a Recurring Deposit?
A Recurring Deposit (RD) lets you save a fixed amount every month for a chosen tenure. Banks in India typically compound RD interest quarterly, similar to fixed deposits. It is a popular way to build a corpus with small monthly savings.
RD Formula Explained
M = P × [(1 + i)^n − 1] / [1 − (1 + i)^(−1/3)]Where:
- M = Maturity amount
- P = Monthly deposit amount
- i = Quarterly interest rate (annual rate ÷ 400). For 6.5% p.a., i = 0.01625
- n = Total number of months (tenure in years × 12)
Why divide by 400? Indian banks compound RD interest quarterly. Annual rate / 4 gives quarterly rate, and dividing by 100 converts percentage to decimal, so rate / 400 does both.
How it works: Each monthly deposit earns compound interest for a different number of quarters. Your first deposit earns interest for the full tenure, while your last deposit earns no interest (deposited on maturity). The formula accounts for this staggered compounding.
Tip: For the same monthly investment and tenure, RDs and SIPs serve different purposes. RDs offer guaranteed returns (6-7%) with zero risk - ideal for short-term goals. SIPs in equity mutual funds carry market risk but historically deliver 10-12% returns - better for long-term wealth creation.
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Frequently Asked Questions
What is a Recurring Deposit?
A Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount every month for a chosen tenure. Banks and post offices in India pay interest similar to FDs, typically with quarterly compounding. It is ideal for building a corpus from monthly savings.
How is RD maturity calculated?
Indian banks commonly use a quarterly compounding formula: M = P × [(1 + i)^n − 1] / [1 − (1 + i)^(−1/3)], where P is the monthly deposit, i is the quarterly rate (annual rate / 400), and n is the number of months.
What is a typical RD tenure in India?
RDs are usually available from 6 months up to 10 years. This calculator supports tenures up to 10 years, which covers most bank and post office RD products. Longer tenures generally offer higher interest rates.
What are typical RD interest rates?
RD rates change quarterly and vary by institution. As example reference (October 2026): banks offered 6-6.5% p.a., Post Office 6.7% for 5-year RDs. Senior citizens get 0.25-0.5% higher. Rates are usually the same as or slightly lower than FD rates for the same tenure. Always check current rates with your bank or post office.
What happens if I miss an RD deposit?
Missing monthly deposits makes the RD irregular. Banks may charge penalties (₹1-5 per missed deposit) or reduce the interest rate. Some banks allow a grace period of 1-2 months, but repeated misses can lead to account closure. Set up auto-debit to avoid missing payments.
Can I withdraw my RD before maturity?
Premature withdrawal is allowed but attracts a penalty (typically 1% reduction in interest rate), and you lose the benefit of full compounding. The maturity amount is recalculated based on the actual tenure held and the reduced rate. Plan your tenure based on when you need the funds.
Is RD interest taxable?
Yes, RD interest is taxable as per your income tax slab. Banks deduct 10% TDS if your total interest income (FDs + RDs combined) exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G/15H if you have no tax liability.
RD vs SIP: Which is better?
RDs offer guaranteed returns (6-7% pre-tax) with zero risk - ideal for short-term goals (1-5 years). SIPs in equity mutual funds carry market risk but historically deliver 10-12% CAGR - better for long-term wealth creation (7+ years). Use RDs for safety, SIPs for growth.