Recurring Deposit Calculator
Calculate the maturity value and interest earned on a Recurring Deposit. Enter your monthly deposit, interest rate, and tenure to plan your savings.
Recurring Deposit Calculator
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Formula: Maturity = P x n + P x n(n+1)/(2x12) x r/100
Worked example — Maturity ≈ ₹1,99,500
Formula
Maturity = P x n + P x n(n+1)/(2x12) x r/100
RD maturity uses simple interest on each installment for its remaining tenure, with quarterly compounding. Each deposit earns interest for a decreasing number of months. Banks typically use quarterly compounding.
Worked Examples
Example 1: ₹5,000/mo for 3 years
Problem:₹5,000 monthly, 7% rate, 36 months
Solution:Total deposited: ₹1,80,000. Interest: ~₹19,500
Result:Maturity ≈ ₹1,99,500
Frequently Asked Questions
What is a Recurring Deposit?
RD is a savings scheme where you deposit a fixed amount monthly for a fixed tenure. It earns higher interest than a savings account. Available in banks and post offices in India.
Is RD interest taxable?
Yes. Interest on a recurring deposit is not exempt: it is added to your income and taxed at your slab rate, and it is assessed as it accrues each year rather than only in the year the RD matures. Banks also deduct tax at source once your combined interest from term and recurring deposits at that bank passes the prescribed threshold, with a higher threshold for senior citizens. The threshold and the TDS rate are revised from time to time, so confirm the current figures with the bank or the Income Tax Department before planning around them.
Why does quarterly compounding matter for RD maturity value?
Banks credit RD interest on a quarterly rest, meaning interest earned in a quarter is added to the balance and itself earns interest from the next quarter onward. Each monthly installment therefore compounds for the number of complete quarters remaining in the tenure. Quarterly rests give a slightly higher maturity value than simple interest at the same nominal rate, and slightly less than monthly compounding would.
Why is the effective yield shown lower than the quoted interest rate?
The quoted rate is an annual rate applied to money for the time it is actually on deposit. Your first installment earns for the whole tenure, but the last one earns for barely a month, so the average holding period across all deposits is roughly half the tenure. Interest earned divided by total deposited therefore comes out well below the headline rate, which is why the effective yield figure looks modest even on a competitive RD.
What is the difference between a recurring deposit and a fixed deposit?
A fixed deposit places a single lump sum for the full term, so the entire principal compounds from day one. A recurring deposit builds the principal in monthly installments, so most of the money is invested for less than the full tenure. For the same nominal rate and the same total amount contributed, an FD produces more interest, while an RD suits savers who have a monthly surplus rather than a lump sum.
What happens if I miss a monthly RD installment?
Most banks levy a small penalty for each defaulted installment and may treat an account with repeated defaults as prematurely closed, paying interest at the reduced premature-withdrawal rate. Because the maturity value assumes every installment lands on schedule, a missed month reduces both the principal contributed and the interest that installment would have earned. Confirm the specific default charge and tolerance with your bank, since it varies by institution.
Can I close a recurring deposit before maturity?
Premature closure is generally allowed, but interest is usually recomputed at the rate applicable to the period the deposit actually ran, often with a penalty deducted from that rate. The practical effect is that an RD closed a year into a five-year term yields far less than the projection here. Because of this, choose a tenure and installment you are confident of sustaining rather than the largest figure your cash flow currently allows.
How does a recurring deposit compare with a monthly SIP in a mutual fund?
Both invest a fixed sum monthly, but an RD pays a contractual rate of interest with the deposit held by the bank, whereas a SIP buys market-linked units whose value can fall. An RD gives a maturity value you can compute in advance, which is what Recurring Deposit Calculator does; a SIP has no guaranteed outcome. They serve different jobs, with the RD suited to short horizons and money you cannot put at risk. This is general information, not investment advice.
Does raising the monthly deposit or extending the tenure add more to the maturity value?
Raising the installment scales the maturity value almost proportionally, because every extra rupee is contributed and compounded on the same schedule. Extending the tenure adds more than proportionally, since new installments arrive and all earlier installments compound for additional quarters. Extending, however, ties up cash for longer and locks in today's rate, so the choice is between a larger commitment now and a longer one.
How is RD interest accrued and when is it actually paid out?
Interest accrues each quarter on the running balance but is normally paid as a single sum with the principal at maturity, which is why the projection reports one maturity value rather than a monthly income stream. Accrued but unpaid interest can still be treated as income in the year it accrues, so the year you report it may not be the year you receive the cash. Confirm the current treatment with a tax professional.
References
Reviewed for accuracy by Sahil, Senior Finance & Tax Editor · Editorial policy
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