A recurring deposit, or RD, is one of the simplest ways to build a savings habit in India. Instead of needing a large lump sum, you deposit a fixed amount every month — even ₹1,000 or ₹2,000 to start — and the bank pays you interest on it for a tenure you choose, usually between 6 months and 10 years. Because the interest compounds every quarter, each instalment quietly earns interest on interest, and small monthly deposits can grow into a meaningful sum over time.
RDs suit anyone who earns a monthly salary and wants a safe, disciplined way to save for a concrete goal: a wedding in the family, a down payment on a scooter or home, a child’s school fees, or an emergency fund. There is no market risk — the rate is fixed when you open the account — so the only discipline required is letting the instalments continue. Missing instalments can attract a small penalty, which is actually a useful nudge to stay regular.
Working out the maturity value by hand is tedious, because every monthly instalment earns interest for a different length of time — the first deposit compounds for the full tenure while the last one barely earns anything. This RD calculator does that maths for you. Enter your monthly deposit, the annual interest rate and the tenure, and it shows your total investment, the interest earned and the maturity value, so you can plan your goal with a realistic number in mind.
How it works
Banks in India compound RD interest quarterly. Conceptually, each monthly deposit is treated as a separate mini-deposit that earns compound interest from the month it goes in until the RD matures. The standard formula banks use is: maturity value = R × [(1+i)^n − 1] ÷ [1 − (1+i)^(−1/3)], where R is the monthly instalment, i is the quarterly interest rate (annual rate divided by 4, then divided by 100), and n is the number of quarters in the tenure. The slightly unusual denominator adjusts for deposits arriving monthly while compounding happens quarterly.
Two things worth knowing: first, the interest rate is fixed for your entire tenure at the rate prevailing when you open the RD, so later rate changes don’t affect you. Second, the interest you earn is fully taxable — it gets added to your income and taxed at your slab rate, and the bank deducts TDS if the interest crosses the yearly threshold. The calculator shows pre-tax figures, so your actual in-hand maturity value will be a little lower after tax. Use the result for planning, then confirm the exact payout schedule with your bank.
How to use this tool
- Enter the fixed amount you will deposit every month, for example ₹5,000.
- Enter the annual interest rate your bank is offering on RDs.
- Choose the tenure in months or years — pick one you can comfortably complete.
- Click Calculate to see total deposits, interest earned and maturity value.
- Try different monthly amounts or tenures to see which combination reaches your goal.
- Compare the result with your bank's own RD chart before opening the account.
Practical tips
- Pick a tenure you can actually finish — premature closure usually costs about 1% in lost interest rate.
- Remember the maturity figure is pre-tax; mentally shave off your slab rate on the interest portion for a realistic number.
- If your goal is more than 5 years away, compare the RD return with PPF or a conservative mutual fund — safety has an opportunity cost.
- Set the instalment date just after salary day so the deposit happens before you can spend the money.
Frequently asked questions
How is RD interest calculated?
Banks compound RD interest quarterly. Each monthly instalment earns interest from the month it is deposited until maturity, so earlier deposits earn more than later ones. This calculator applies the standard quarterly-compounding formula using your monthly deposit, annual rate and tenure to estimate the maturity value.
Is the maturity value shown here exact?
No, it is an estimate. Banks may round figures differently, apply slightly different compounding dates, deduct TDS on the interest, and levy penalties for missed instalments. Use the result for planning and budgeting, then confirm the final maturity figure with your bank before making decisions.
Can I withdraw a recurring deposit early?
Most banks allow premature withdrawal but pay a lower interest rate as a penalty, typically around 1% less than the promised rate, and some charge a small closure fee. An RD works best when left untouched until maturity, so choose a tenure you are comfortable completing without interruption.
Are RD returns taxable?
Yes. The interest earned on a recurring deposit is added to your total income and taxed at your slab rate. If the interest crosses the threshold in a financial year, the bank deducts TDS. The calculator shows pre-tax figures, so your actual in-hand maturity value will be slightly lower after tax.
What happens if I miss a monthly instalment?
Banks charge a small penalty for each missed instalment, usually a rupee or two per hundred rupees of the instalment per month of delay. Repeated defaults can lead the bank to close the RD prematurely. Setting up an automatic transfer for just after salary day is the simplest way to avoid this.
RD vs FD — which should I choose?
Choose an FD when you already have a lump sum; choose an RD when your savings arrive month by month from salary. Returns per rupee are similar for the same rate and tenure — the difference is purely about how your money flows in. Many savers use both: an FD for existing savings and an RD for ongoing income.
Note: Figures are estimates based on standard quarterly compounding; actual maturity values vary with your bank's rules, penalties and rounding. Interest earned is fully taxable at your slab rate — this is not financial advice.