What is a Recurring Deposit?
A recurring deposit (RD) is a savings scheme where you deposit a fixed amount every month for a fixed tenure at a fixed interest rate. It builds the saving habit of a SIP with the certainty of an FD, which makes it popular for short and medium-term goals.
How RD Interest is Calculated
Banks and the post office compound RD interest quarterly. Each monthly instalment earns interest only for the time it stays in the account, so the first instalment earns the most and the last earns the least:
Worked example
₹5,000 a month at 7% for 5 years (60 instalments): total deposits are ₹3,00,000, interest earned is about ₹59,664, and the maturity value is about ₹3,59,664.
RD vs FD vs SIP
| Feature | RD | FD | SIP (mutual fund) |
|---|---|---|---|
| How you invest | Monthly | Lump sum | Monthly |
| Returns | Fixed | Fixed | Market-linked |
| Risk | Very low | Very low | Moderate to high |
| Best for | Short-term goals | Parking a lump sum | Long-term wealth |
Tips
- Missing instalments can attract a penalty and reduce interest — set up an auto-debit.
- RD interest is taxable at your slab rate, and TDS may apply.
- Premature closure is usually allowed with a lower interest rate.
Frequently Asked Questions
How is RD maturity calculated?
Each instalment earns quarterly-compounded interest for the months it stays deposited: maturity = Σ R × (1 + r/400)^(months remaining ÷ 3). ₹5,000 a month at 7% for 5 years gives about ₹3,59,664 on deposits of ₹3,00,000.
RD or SIP — which is better?
An RD gives a fixed, known return with very low risk. A SIP in mutual funds can earn more over long periods but the value can fall. Many people use RDs for short-term goals and SIPs for long-term ones.
Is RD interest taxable?
Yes, RD interest is taxed at your slab rate and TDS may apply like an FD. The figures here are before tax.
Does the calculator store my numbers?
No. All calculations run inside your browser. The amounts you enter are not sent to our server or saved anywhere.