What is the RD Calculator?
A recurring deposit is built for people who save from income rather than from savings. A fixed amount is deposited every month for an agreed term at a rate fixed at the outset, and the whole balance matures together.
This calculator estimates what a monthly deposit accumulates to over the term, including the interest earned. It suits anyone building toward a defined goal on a defined date and unwilling to accept market risk to get there.
What each input means
- Monthly deposit
- The fixed amount you deposit every month. Missing an instalment usually attracts a small penalty and lowers the maturity value.
- Interest rate
- The rate the bank or post office quotes for your tenure. It stays fixed for the life of the deposit once you open it.
- Tenure
- The number of months the deposit runs. Interest is compounded every quarter, so each deposit earns interest on its interest for as long as it stays in.
How this calculation works
Each monthly deposit earns interest from when it is made until maturity, so early deposits earn considerably more than late ones. The maturity value is the sum of every deposit plus the interest each accumulated over its own holding period.
This is why an RD earns less than a fixed deposit of the same total value. In an FD the whole sum is working from day one; in an RD the average balance across the term is roughly half the final total.
Formula: Maturity = sum of each deposit × (1 + r ÷ 4)^(months it was held ÷ 3), compounded quarterly
Getting the most out of the result
- Set the monthly amount at a level you can sustain for the full term — missed instalments usually attract a penalty.
- Align the term with your goal date so the money matures when you actually need it.
- Compare the rate against a fixed deposit if you already have the lump sum. An FD will earn more on the same total.
- Check how missed or late instalments are treated before committing, since policies differ.
- Remember that interest is generally taxable, reducing the effective return below the quoted rate.
Common mistakes to avoid
Savers commonly expect a recurring deposit to return the same as a fixed deposit at the same rate, and are puzzled when it does not — the reason is simply that most of the money has been invested for far less than the full term. Committing to a monthly amount that leaves no slack is another problem, since missed instalments attract penalties and can affect the maturity value. And as with any fixed-rate product, ignoring tax and inflation makes the real return look better than it is.
Frequently asked questions
Why does an RD earn less than an FD at the same rate?
Because the money is invested progressively rather than all at once. Your first instalment earns interest for the whole term; your last earns interest for a month. The average balance over the term is roughly half the final total.
What if I miss a monthly deposit?
Most institutions charge a penalty and some may reduce the maturity value or close the account after repeated misses. Check the specific terms — policies vary considerably.
Can I withdraw before maturity?
Usually yes, with a penalty applied through a reduced interest rate. Some providers require a minimum period before premature closure is permitted at all.
Is RD interest taxable?
Generally yes, treated as income in most jurisdictions, and tax may be deducted at source above a threshold. Factor this in when comparing the quoted rate against alternatives.
Can I change the monthly amount later?
Usually not within an existing deposit — the instalment is fixed at opening. If your capacity changes, you would typically open an additional recurring deposit rather than alter the existing one.
Is an RD better than a monthly SIP?
They answer different questions. An RD gives a contractually certain outcome with no market risk and modest returns. A SIP offers higher potential returns with genuine risk of loss. Certainty of amount and date favours the RD; long-horizon growth favours the SIP.
What happens at maturity?
The full amount including interest is paid out, usually to a linked account. Many providers offer automatic renewal, so check the instruction on your account if you want the money released.