RD Calculator — Recurring Deposit Maturity & Interest

📜 RD methodology source

Maturity follows the standard RD formula with quarterly compounding used by Indian banks and post offices; the India Post RD rate is set quarterly by the Ministry of Finance alongside other small-savings rates. Last verified: June 2026.

How does the RD maturity formula work?

An RD is effectively a series of mini fixed deposits. The instalment paid in month 1 compounds quarterly for the entire tenure; the month-2 instalment for one month less; and so on. The maturity value is the sum: M = Σ R × (1 + i/4)^(4 × remaining years). This calculator computes the exact per-instalment compounding banks use. Pairs well with the FD Calculator and the Compound Interest Calculator.

What do monthly deposits grow to?

RD vs FD vs SIP — which fits your goal?

Practical rule: emergency funds and goals under 3 years (vacation, gadget, insurance premium corpus) → RD. Wealth building over 5+ years → SIP. Idle lump sums → FD ladder.

Is the post office RD worth it?

India Post’s 5-year RD pays 6.7% (Q1 FY 2025-26), compounded quarterly, with sovereign backing and a ₹100 minimum. It allows one withdrawal of up to 50% after a year and a loan facility. For small savers in areas with limited bank access, it remains the default recurring-savings vehicle.

How do you use RDs for goal-based saving?

The RD’s real power is behavioural: the auto-debit makes saving the default, not a monthly decision. Map each short-term goal to its own RD: a 12-month ₹8,000 RD for next Diwali’s travel (₹1 lakh), an 18-month ₹6,000 RD for an insurance premium corpus, a 24-month ₹15,000 RD for a car down payment. Separate RDs prevent goal raiding and let you set each tenure to the exact need date.

What is an iWish or flexi-RD?

Several banks offer flexible recurring deposits (ICICI iWish, similar products elsewhere) that allow variable monthly amounts and top-ups instead of a fixed instalment — useful for irregular incomes. The trade-off is usually a slightly lower rate and the loss of instalment discipline. For freelancers, a flexi-RD plus a calendar reminder beats skipping a rigid RD and paying default penalties.

RD vs liquid funds for the emergency corpus?

For a 6-month emergency fund being built from scratch, an RD wins on certainty and zero exit friction at maturity. Liquid funds offer marginally better post-tax outcomes for upper slabs and instant ₹50,000 redemptions — but introduce mark-to-market wobble. A practical hybrid: build the corpus via a 12-month RD, then park the matured lump in a sweep-in FD where it stays liquid and earning.

What happens to an RD at maturity?

Banks credit the maturity proceeds to your savings account or auto-renew based on your standing instruction. Auto-renewal re-locks at the prevailing rate, which may be lower — review rather than default. If you do not need the lump sum, converting the matured RD into an FD ladder (split across 1–3 year buckets) preserves the discipline you just built while upgrading liquidity.

Worked example: an 18-month wedding RD, end to end

Meera needs ₹2 lakh in 18 months for wedding expenses. Required instalment at 7%: roughly ₹10,500/month (the calculator shows ₹10,500 × 18 = ₹1,89,000 deposited growing to ≈ ₹2,00,580). She sets the auto-debit for the 2nd of each month, names the RD “Wedding Fund” in netbanking, and ignores it. Two instalments are late by a week during a job switch — penalty ≈ ₹40 total, maturity barely dented. At month 18 the proceeds land in savings two days before the caterer’s advance. The counterfactual SIP at 12% would have shown ≈ ₹2,07,000 in a good market — or ₹1,70,000 in a bad one. For a date-certain expense, the ₹6,000 expected premium was never worth the ₹30,000 downside.

RD tax reporting: the part savers forget

RD interest accrues yearly and appears in your AIS — declare it under Income from Other Sources annually even though you receive it at maturity. Skipping accrual reporting then showing a lump in the maturity year both mismatches AIS and can push that year into a higher slab. TDS credits (Form 26AS) offset the final liability. For joint RDs, interest is taxed in the first holder’s hands; for a minor’s RD, it clubs with the higher-earning parent (₹1,500/child exemption).

Bank vs post office vs NBFC RDs: where to open?

Practical pick: a small finance bank RD inside the ₹5 lakh DICGC envelope captures the best risk-adjusted rate; automate it from your salary account on payday so the saving happens before the spending can.

RD checklist before you open

✔ Confirm the rate for your exact tenure — banks slot RDs into the same buckets as FDs, and a 21-month RD may pay less than a 24-month one. ✔ Set the debit date 2–3 days after salary credit, never before. ✔ Match maturity to the goal date minus two weeks of buffer. ✔ Check the senior-citizen bonus if applicable — most banks extend the +0.5% FD bonus to RDs. ✔ Add a nominee at opening. ✔ Note the instalment-default policy in the deposit terms; grace periods vary from 5 days to a full month across banks. ✔ For amounts that will exceed ₹5 lakh at maturity with one bank, split providers to stay within DICGC insurance.

Frequently asked questions

How is RD interest calculated?

Each monthly instalment earns quarterly-compounded interest for its remaining tenure. The first instalment compounds for the full term, the last for just one month — which is why RD returns are lower than an FD of the same amount and rate.

Is RD interest taxable? Does TDS apply?

Yes — RD interest is fully taxable at your slab and (since 2015) RDs are covered under TDS: 10% deducted if annual interest across deposits exceeds ₹50,000 (₹1 lakh for senior citizens).

What happens if I miss an RD instalment?

Banks charge a small penalty (typically ₹1–2 per ₹100 per month of delay) and the maturity value reduces. Repeated defaults (usually 4–6 consecutive) can lead the bank to close the RD prematurely.

RD vs SIP: which is better?

RD offers guaranteed ~7% with zero risk — right for goals under 3 years. Equity SIPs have historically returned 10–14% over 7+ year horizons but fluctuate. Match the instrument to the goal timeline: RD for short-term certainty, SIP for long-term growth.

Can I take a loan against my RD?

Yes — most banks lend up to 80–90% of the RD balance at 1–2% above the RD rate. This avoids premature closure penalties when you need short-term funds.

Can NRIs open recurring deposits?

Yes — through NRE-RD (instalments from foreign earnings; interest tax-free in India and fully repatriable) or NRO-RD (from India-sourced income; interest taxable with 30% TDS subject to DTAA relief). Tenures and rates broadly track resident RDs at the same bank.

Is there a penalty for closing an RD early?

Yes — premature closure typically applies the rate for the period actually run minus 0.5–1%, and some banks pay no interest if closed within 3 months. A loan against the RD (80–90% of balance) is usually smarter than breaking it for short-term needs.

Related calculators

📋 Financial disclaimer: This calculator provides estimates based on published rates and rules and is not investment, tax, or legal advice. Rates change by government/regulator notification and outcomes depend on your circumstances — consult a SEBI-registered advisor or chartered accountant for personal decisions. See methodology.

Sources & References

• NSI — Small Savings Rate Notifications — India Post RD rate set quarterly by Ministry of Finance
• RBI — Scheduled Commercial Bank RD Rates — Bank RD rates and quarterly compounding norms