How to Use the RD Calculator
Enter your monthly deposit, the RD interest rate your bank or post office offers, and the tenure in years. The maturity value updates instantly with quarterly compounding, and the result grid also shows what the same total money would have earned as an upfront fixed deposit — the comparison most savers actually want to make.
RD Calculator Formula
M = Σ deposits, with balance × (1 + r/4) applied every quarterM= Maturity valuer= Annual interest rate (Post Office 5-yr RD: 6.7%)n= Tenure in months (deposits monthly, compounding quarterly)
Example Calculation
Depositing ₹5,000 every month for 5 years at 6.7% (Post Office RD rate):
Total deposited = ₹3,00,000 over 60 months; each deposit earns quarterly-compounded interest for its remaining tenure
Maturity ≈ ₹3.56 lakh — about ₹56,000 of interest
What a recurring deposit really is
A recurring deposit is the disciplined cousin of the fixed deposit: instead of parking a lump sum, you commit a fixed amount every month and the bank pays the same guaranteed, quarterly-compounded rate on the accumulating balance. It exists for exactly one job — turning a monthly surplus into a guaranteed sum on a known date, with zero market risk.
Because each instalment is invested for a progressively shorter time, the effective return on an RD is lower than an identical-rate FD on the same total money invested upfront — the result grid above shows both numbers side by side so you can see the cost of staggering.
Where RDs fit — and where they don’t
- Right fit: a school-fees fund due in 18 months, a wedding two years away, an emergency-fund top-up, a first saving habit.
- Wrong fit: long-term wealth building — post-tax RD returns rarely beat inflation, so a 10-year goal parked in RDs quietly loses purchasing power.
- The tax drag is real: at the 30% slab, a 6.7% RD nets about 4.7% — below typical inflation.
- For horizons beyond 5 years, compare with a SIP; for lump sums, compare with an FD; for 15-year tax-free saving, PPF wins.
Getting the most from an RD
Match the tenure to the goal date exactly — premature closure penalties erase a meaningful slice of interest. If you are a senior citizen, always ask for the senior rate; the 0.5% premium compounds. And if your bank offers a "flexi" or sweep-in RD, check the actual credited rate: flexibility often costs 0.25–0.5%. Finally, remember to declare RD interest in your ITR every year on an accrual basis — it is taxable even before maturity, and mismatches with the bank’s AIS reporting trigger notices.
Frequently Asked Questions
How is RD interest compounded?
Banks and the Post Office compound RD interest quarterly. Your monthly deposits are accumulated and interest is credited to the balance every quarter, which is exactly how this calculator simulates it.
What is the Post Office RD rate?
The Post Office 5-year RD currently pays 6.7% per annum, compounded quarterly. Bank RD rates vary by bank and tenure, typically 6.5–7.5%, with senior citizens usually getting 0.5% extra.
Is RD interest taxable?
Yes — RD interest is fully taxable at your income-tax slab, like FD interest. Banks deduct 10% TDS if your total interest across deposits exceeds ₹40,000 in a year (₹50,000 for senior citizens).
RD or SIP — which is better for monthly saving?
They serve different goals. An RD gives a guaranteed, fixed return — right for short horizons and zero risk tolerance. A SIP in equity funds targets higher long-term returns with volatility. For goals under 3 years, an RD is usually the sensible pick; beyond 5 years, a SIP has historically won by a wide margin.
What happens if I miss an RD instalment?
Banks charge a small penalty (Post Office: ₹1 per ₹100 per month of default). After 4 consecutive defaults a Post Office RD is discontinued, though it can be revived within two months.
Can I break an RD early?
Yes, but premature closure typically pays a lower rate (often 1% below the booked rate, or the rate for the period actually run). Post Office RDs allow closure after 3 years at the savings-account rate.
Assumptions & Methodology
- Deposits are made at the start of every month; interest is compounded quarterly (the bank and Post Office convention).
- The rate stays constant for the full tenure — RDs lock your rate at booking.
- TDS and premature-closure penalties are not deducted; interest is fully taxable at your slab.
Sources
All calculations run in your browser and are provided for information only — they are not investment, tax or legal advice. Verify current rates and rules with the official source above before acting.
Related Guides
- SIP vs FD: Growth With Risk or Certainty That Shrinks?At 5 years it is a genuine contest. At 15, it never has been: the FD preserves rupees while the SIP multiplies them. The horizon rule, with numbers.
- RD vs FD: Same Bank, Same Rate — Different JobsOn the same ₹3 lakh, the FD earns nearly double the interest of an RD — and the reason is obvious once you see it. But the comparison itself is usually wrong.
- FD Interest, Compounding and Tax: What Your Bank Doesn’t Spell OutA "7% FD" actually yields 7.19% — and after 30% tax, just 5.03%. The compounding, the TDS thresholds, and the laddering tactic worth knowing.