RD Calculator - Recurring Deposit Maturity & Interest

A Recurring Deposit (RD) is one of the simplest and safest ways to build savings in India through disciplined monthly deposits.

Reviewed by: CalcMojo Editorial Team

This RD calculator computes your maturity amount and total interest earned based on your monthly deposit, interest rate, and tenure. Enter your numbers and see exactly what you will receive when the RD matures.

Unlike a fixed deposit that requires a lump sum upfront, an RD allows you to invest a fixed amount every month, making it accessible to salaried individuals, students, and anyone looking to build a savings habit without needing a large initial corpus. Banks compound RD interest quarterly, and each monthly installment earns interest for the remaining tenure, which is why the maturity amount is always higher than simple interest calculations might suggest.

Whether you are saving for a short-term goal like a vacation or gadget purchase, building a down payment for a home, or simply parking money in a safe instrument with guaranteed returns, this calculator shows you the exact numbers. Compare different monthly amounts and tenures to find the combination that matches your goal and budget.

How Recurring Deposit Interest Is Calculated

RD interest calculation in India uses a compounded interest formula where each monthly installment earns interest for a different duration. The first installment earns interest for the full tenure, the second for one month less, and so on.

The maturity value of an RD is calculated as:

A = P x [(1 + r/n)^(n x t) – 1] / [1 – (1 + r/n)^(-1/3)]

In simplified terms, each monthly deposit is treated as a separate mini-FD earning compound interest for the remaining tenure. The bank compounds quarterly, meaning interest earned every quarter is added to the deposit balance and itself starts earning interest.

For a practical example: a monthly RD of ₹10,000 at 7% for 3 years (36 months). Your total deposits amount to ₹3,60,000. With quarterly compounding, the maturity amount is approximately ₹4,01,540, earning about ₹41,540 in interest. The interest may seem modest compared to equity, but the guarantee of returns with zero risk makes RDs attractive for specific financial goals.

Each monthly installment effectively earns compounded interest for a different period. The first ₹10,000 deposit earns interest for 36 months, the second for 35 months, the sixth for 30 months, and the last deposit earns interest for just one month. This staggered compounding is why exact RD calculations are complex to do manually but straightforward with this calculator.

RD vs FD: Which Is Better for Your Situation

Both RDs and FDs are bank deposit products with guaranteed returns, but they serve different needs.

When to choose an RD:

You should opt for an RD when you want to save from monthly income rather than a lump sum. If your goal is building a corpus through regular savings — perhaps you are saving ₹15,000 per month toward a vacation fund or a car down payment — an RD enforces that discipline. The money leaves your account each month automatically, reducing the temptation to spend.

RDs are also suitable when you do not have a large amount to invest at once. A fresh graduate saving ₹5,000 per month builds ₹60,000 per year in deposits plus interest, gradually accumulating a meaningful corpus. Use the FD Calculator to see what a lump sum FD would earn for comparison.

When to choose an FD:

If you already have a lump sum (from a bonus, inheritance, or matured investment), an FD typically earns slightly more than an RD for the same rate and tenure. This is because the entire principal earns interest from day one. FD rates are also usually 0.1% to 0.25% higher than RD rates at most banks.

The Interest Rate Difference. Most banks offer slightly lower rates on RDs compared to FDs. This is because in an FD the bank has the entire deposit upfront, while in an RD the money flows in gradually. On a 2-year tenure, if the FD rate is 7.0%, the RD rate might be 6.8% to 7.0%. Always check both rates before deciding.

RD Tenure and Amount: Planning Your Deposit

RD tenures in India range from 6 months to 10 years, with the sweet spot for most savers being 1 to 3 years. Minimum monthly deposits start from as low as ₹100 at many banks, making RDs accessible to virtually everyone.

Short-Term RDs (6-12 months). Best for near-term goals like building an emergency fund or saving for a specific purchase. The interest earned is modest, but the discipline of regular saving is the primary benefit. A 12-month RD of ₹10,000 per month at 6.5% yields approximately ₹1,24,220, earning about ₹4,220 in interest.

Medium-Term RDs (1-3 years). The most common tenure for RDs. Rates are usually favorable, and the compounding effect becomes more noticeable. A 3-year RD of ₹10,000 per month at 7% yields approximately ₹4,01,540 on deposits of ₹3,60,000.

Long-Term RDs (3-10 years). For long-term goals, consider whether an RD is the best instrument. Over 5-plus years, the lower returns of RDs (compared to equity SIPs or PPF) result in significantly less wealth accumulation. A 5-year SIP at 12% would build substantially more corpus than an RD at 7% for the same monthly amount. Compare with the SIP Calculator to see the difference.

Tax Treatment of Recurring Deposits

RD interest is taxable in India, and the tax rules are identical to those for fixed deposits.

TDS on RD Interest. Banks deduct TDS at 10% when the total interest earned across all FDs and RDs with that bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If you do not provide your PAN, TDS is deducted at 20%.

Taxable at Slab Rate. The interest earned on RDs is added to your total income and taxed at your applicable income tax slab rate. For someone in the 30% bracket, a 7% RD effectively yields about 4.9% after tax. This post-tax return should be the number you compare against other investments.

Form 15G/15H. If your total income is below the basic exemption limit (₹2.5 lakh for individuals under 60, ₹3 lakh for senior citizens, ₹5 lakh for super senior citizens), you can submit Form 15G (or 15H for seniors) to the bank to avoid TDS deduction. This does not make the interest tax-free — it simply prevents upfront TDS, and you must still report the interest in your ITR. Use the Income Tax Calculator (Old vs New) to check your total tax liability.

No 80C Benefit. Unlike tax-saving FDs, regular RDs do not qualify for any deduction under Section 80C. The post office offers a 5-year tax-saving RD, but bank RDs are not eligible.

Post Office RD vs Bank RD

The Indian Post Office offers Recurring Deposits through its savings schemes, and they have some notable differences from bank RDs.

Interest Rate. Post office RD rates are set by the government quarterly and are often competitive with or higher than bank RD rates. The current post office RD rate is reviewed quarterly under the small savings scheme.

Tenure. Post office RDs have a fixed 5-year tenure with an option to extend for another 5 years. Bank RDs offer flexible tenures from 6 months to 10 years.

Safety. Post office deposits carry a sovereign guarantee from the Government of India. Bank deposits up to ₹5 lakh are insured by DICGC. For deposits above ₹5 lakh, the post office is marginally safer, though large bank failures in India are extremely rare.

Premature Withdrawal. Post office RDs allow premature closure after 3 years with a penalty. Bank RD premature withdrawal rules vary but generally allow closure anytime with a reduced interest rate.

Account Opening. Post office RDs can be opened at any post office with minimal documentation. Bank RDs require an account with the bank.

Strategies to Maximize RD Returns

RD Laddering. Similar to FD laddering, open multiple RDs with staggered maturity dates. This provides regular liquidity while keeping funds invested at favorable rates. For example, open three RDs of ₹5,000 each maturing in 1, 2, and 3 years. As each matures, reinvest in a new 3-year RD.

Compare Rates Aggressively. RD rates vary between 5% and 8.5% across banks. Small finance banks and post offices often offer the best rates. Even a 0.5% difference on a ₹10,000 monthly RD over 3 years means approximately ₹2,700 more in interest. Check current rates at 3-5 banks before committing.

Auto-Renewal. Set your RD to auto-renew at maturity if you do not need the funds. This prevents the corpus from sitting in a savings account earning lower interest while you decide what to do with it.

Combine with SIPs. If your goal is wealth building, allocate a portion of monthly savings to an RD for safety and the remainder to equity SIPs for growth. A 60% SIP and 40% RD split provides growth potential with a safety buffer.

When RDs Make Sense and When They Do Not

RDs work well for:

Short-term savings goals (6 months to 3 years)
Emergency fund building when you do not have a lump sum
Risk-averse investors who cannot tolerate any market fluctuation
Disciplined saving for specific planned expenses
Senior citizens wanting guaranteed regular savings growth

RDs are suboptimal for:

Long-term wealth creation (5-plus years) — SIPs offer significantly better returns
Tax-conscious investors in higher brackets — PPF offers tax-free returns
Beating inflation — RD post-tax returns often barely match or slightly exceed inflation
Investors seeking flexibility — breaking an RD early reduces returns significantly

For long-term goals, run the same monthly amount through the SIP Calculator and PPF Calculator to see the wealth gap compared to an RD. The difference over 10-20 years is substantial.

This calculator provides estimates. Actual returns depend on your financial institution’s terms.

Frequently Asked Questions

How is RD maturity amount calculated?

Each monthly RD installment is treated as a separate deposit earning compound interest for the remaining tenure. Banks compound quarterly. The first installment earns interest for the full tenure, the second for one month less, and so on. The maturity amount is the sum of all these individually compounded deposits.

What is the minimum amount for an RD in India?

Most banks allow RDs with a minimum monthly deposit of ₹100 to ₹500. Post office RDs start at ₹100 per month with no upper limit. Some banks set minimum deposits at ₹1,000 for special rate products. There is typically no maximum limit for bank RDs.

Can I withdraw my RD before maturity?

Yes, most banks allow premature closure of RDs. However, the interest rate applied will be lower — typically the rate applicable for the actual period held minus a penalty of 0.5% to 1%. Some banks do not allow premature withdrawal within the first month. Post office RDs can be closed after 3 years.

Is RD interest taxable?

Yes, RD interest is fully taxable at your income tax slab rate. TDS at 10% is deducted when total interest from deposits with a bank exceeds ₹40,000 per year (₹50,000 for seniors). Submit Form 15G or 15H to avoid TDS if your total income is below the taxable limit.

What happens if I miss an RD installment?

Missing an RD installment attracts a penalty, typically ₹1 to ₹2 per ₹100 of the monthly installment per month of default. If you miss 3 to 6 consecutive installments (varies by bank), the RD account may be closed prematurely. Some banks allow reviving a defaulted RD within a grace period.

Is RD better than SIP for saving money?

RDs offer guaranteed returns with zero risk, making them suitable for short-term goals and conservative investors. SIPs invest in market-linked mutual funds with higher return potential but also higher risk. For goals beyond 5 years, SIPs have historically outperformed RDs significantly. For goals under 2 years where capital preservation is key, RDs are safer.

What is the difference between RD and PPF?

RD is a bank product with flexible tenures (6 months to 10 years) and taxable interest. PPF is a government scheme with a 15-year lock-in, tax-free interest at 8.2%, and a ₹1.5 lakh annual investment limit with Section 80C benefits. PPF is better for long-term tax-free savings; RDs are better for short-term flexible savings.

Default rates shown are illustrative. Always verify current rates with your bank. Data accurate as of: March 2026