How to use the RD Calculator
- Enter the amount you will deposit every month.
- Enter the yearly interest rate offered by your bank or post office.
- Enter the tenure in years. Use decimals for part years, for example 1.5.
- Read the maturity amount, total deposited and interest earned, and check the year-by-year statement below.
Formula used
Maturity = Σ P × (1 + r ÷ 4)^(m ÷ 3), summed over every instalment, where P is the monthly deposit, r is the yearly rate as a decimal and m is the number of months that instalment stays in the deposit.
Worked example
Here is the RD Calculator worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Monthly deposit | ₹5,000 |
| Interest rate (per year) | 6.5 % |
| Tenure | 5 years |
| Result | |
| Maturity amount | ₹3,54,954 |
| Total deposited | ₹3,00,000 |
| Interest earned | ₹54,954 |
Year-by-year deposit statement
Balance of the default recurring deposit at the end of each year, with interest compounded quarterly.
| Year | Deposited | Balance | Interest |
|---|---|---|---|
| 1 | ₹60,000 | ₹62,143 | ₹2,143 |
| 2 | ₹1,20,000 | ₹1,28,425 | ₹8,425 |
| 3 | ₹1,80,000 | ₹1,99,122 | ₹19,122 |
| 4 | ₹2,40,000 | ₹2,74,527 | ₹34,527 |
| 5 | ₹3,00,000 | ₹3,54,954 | ₹54,954 |
How RD interest is calculated
Every monthly instalment earns interest from the month it is deposited until maturity, and the interest is compounded every quarter. The first instalment therefore earns the most and the last one earns almost nothing. This calculator adds up the final value of each instalment using the formula P × (1 + r ÷ 4)^(m ÷ 3), where m is the number of months that instalment stays in the deposit.
For the default example of ₹5,000 a month for 5 years at 6.5%, you deposit ₹3,00,000 over 60 months and receive ₹3,54,954 at maturity, so the interest earned is ₹54,954.
How tenure and rate change the maturity amount
A longer tenure helps in two ways: you deposit more money and each instalment stays invested for longer. At ₹5,000 a month and 6.5%, one year gives ₹62,143, three years gives ₹1,99,122, five years gives ₹3,54,954 and ten years gives ₹8,44,940.
A higher rate also matters. For five years at ₹5,000 a month, 5.5% gives ₹3,45,754, 6.5% gives ₹3,54,954 and 7.5% gives ₹3,64,449. Rates differ between banks and change over time, so check the current rate before you open an RD.
RD compared with an FD and a SIP
An RD suits people who cannot invest a large sum at once but can save every month. A fixed deposit (FD) needs the whole amount upfront, and its interest is calculated on the full sum from day one. A mutual fund SIP also invests monthly but carries market risk, while an RD return is fixed when you open it.
The trade-off is that RD returns are usually lower than long-term equity returns, and the interest is taxable under the current income tax rules. Check the latest rules or ask a tax adviser how interest from deposits is treated for you.
Missed instalments and early closure
Banks usually charge a small penalty for a late or missed instalment, and several missed payments can lead to the account being closed. Closing an RD early normally means a lower interest rate and sometimes a penalty. These terms vary between banks and post offices, so read the account conditions before you commit.
This calculator assumes every instalment is paid on time and the deposit runs for the full tenure.
Frequently asked questions
How is RD maturity amount calculated?
Each monthly deposit is compounded quarterly from the month it is made until maturity, and all the amounts are added together. This calculator does that month by month.
Why is my bank’s maturity amount slightly different?
Banks may round figures, use day counts or treat the deposit date differently. A small difference is normal. The bank’s figure on your receipt is the one that counts.
Is RD interest compounded monthly or quarterly?
Most Indian banks compound RD interest quarterly. Some institutions use other methods, so check your account terms.
What is the minimum RD tenure?
It varies by bank, and many offer tenures from a few months to ten years. Check with your bank.
Is RD interest taxable?
Interest on deposits is generally taxable as income, and banks may deduct tax at source in some cases. Rules change, so confirm the current position with the bank or a tax adviser.
Can I change the monthly amount during the RD?
Normally no. The monthly instalment is fixed when the account is opened. To save more, you can open a second RD.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.