About the Recurring Deposit (RD) Calculator

A Recurring Deposit (RD) is a popular investment tool that allows individuals to make regular monthly deposits and earn a fixed rate of interest. It is ideal for those who want to build a savings habit and accumulate a corpus over time through small, consistent investments. Our RD calculator helps you determine the maturity value of your investment, showing you the total interest earned over your chosen tenure.

How is the RD Maturity Value Calculated?

The interest on an RD is compounded, usually on a quarterly basis. Each monthly installment earns interest for the remaining duration of the tenure. The formula to calculate the maturity value of an RD where deposits are monthly and compounding is quarterly is as follows:

• M: The maturity amount.
• P: The monthly deposit amount.
• r: The quarterly interest rate (annual rate / 400).
• n: The number of quarters (tenure in years × 4).

Frequently Asked Questions (FAQ)

What is a Recurring Deposit (RD)?

A Recurring Deposit is a special kind of term deposit offered by banks in India which helps people with regular incomes to deposit a fixed amount every month into their RD account and earn interest at the rate applicable to Fixed Deposits.

Is the interest earned on an RD taxable?

Yes, similar to a Fixed Deposit, the interest earned on an RD is fully taxable. It is added to your income and taxed according to your income tax slab. TDS is deducted by the bank if interest income exceeds ₹40,000 in a financial year for regular citizens (₹50,000 for senior citizens).

What is the difference between an RD and a SIP?

An RD provides guaranteed returns at a fixed interest rate, making it a low-risk investment. A Systematic Investment Plan (SIP) in mutual funds, on the other hand, is market-linked, meaning the returns are not guaranteed and carry higher risk, but also have the potential for higher returns, especially over the long term.

What happens if I miss an RD installment?

If you miss a monthly installment, the bank will typically charge a penalty fee. If you default on several payments, the bank may close the RD account prematurely. The rules for penalties vary from bank to bank.

Can I break my RD before maturity?

Yes, premature withdrawal of an RD is possible, but it usually comes with a penalty. The bank may deduct 1% to 2% from the interest rate that was applicable for the period the deposit actually remained with the bank.