Find out what your recurring deposit will mature to
₹62,244
Maturity amount
₹60,000
You deposit
₹2,244
Interest earned
Each instalment earns interest only for the months left after you pay it, so an RD always matures lower than a fixed deposit of the same total. Interest is compounded quarterly, as Indian banks do.
A recurring deposit looks simpler than it is. Because you pay in every month, each instalment earns interest for a different length of time — the first for the whole term, the last for barely a month. That is why an RD always matures at less than a fixed deposit holding the same total, and why estimating it by multiplying the monthly amount rarely comes close. This works it out instalment by instalment, compounding quarterly the way banks do.
Where most RD calculators go wrong
The common shortcut is to take the total deposited and compound it as though it were a lump sum. That overstates the maturity substantially — on a two-year RD at 7%, by roughly the value of a full month's instalment. The correct method treats each payment separately: instalment one is held for twenty-four months, instalment two for twenty-three, and so on down to one. Summing those individual future values is what this does, which is why the figure here is lower than some other calculators and matches what your bank will actually pay.
Choosing a term
Banks usually offer six months to ten years, and the rate is not linear across them. The one-year and two-year buckets often carry the best rates because that is where deposits are most competed for; very long RDs sometimes pay less than an FD of the same tenure. It is worth checking two or three terms before committing, since an extra six months at a worse rate can leave you with less than a shorter deposit renewed.
RD against the alternatives
An RD's real appeal is discipline with certainty: a fixed monthly outgo and a known figure at the end. That suits a goal with a date attached — a fee due next year, a deposit for a rental. Where it does poorly is inflation over long horizons, because the interest is fully taxable and the rate rarely beats price rises by much after tax. For anything beyond three or four years, the question becomes whether the certainty is still worth the gap.
Frequently asked questions
- Why is my RD maturity lower than an FD of the same total?
- Because the money arrives gradually. In an FD the entire amount earns from day one; in an RD your last instalment earns for one month. Comparing the two on the total deposited always flatters the FD, and correctly so.
- How is RD interest compounded?
- Quarterly, at almost every Indian bank — the same convention as fixed deposits. Some post offices compound differently, so check if you hold a post office RD.
- Is RD interest taxable?
- Yes, fully, as income at your slab rate. Banks deduct TDS once interest crosses ₹40,000 in a year, or ₹50,000 for senior citizens. Unlike PPF there is no exemption.
- What if I miss a monthly instalment?
- Most banks charge a small penalty per missed instalment and may close the account after several consecutive misses. The maturity amount falls too, since that instalment never earns anything.
- Can I break an RD early?
- Yes, though you will usually get a rate one percentage point below the contracted rate, and some banks pay nothing at all if the account has run less than three months.
- Which is better, RD or SIP?
- They answer different questions. An RD gives a known amount on a known date with no market risk. A SIP has no guaranteed outcome but has historically returned more over long periods. For a goal under three years, an RD's certainty is usually worth more than the expected extra return.
- Is anything I type stored?
- No. The maths runs in this page. Your deposit amounts are never transmitted.