RD Calculator

A Recurring Deposit, or RD, is the disciplined cousin of the Fixed Deposit. Instead of placing a lump sum once, you commit to depositing a fixed amount every month into the account, typically for a tenure between six months and ten years. The bank pays a fixed rate of interest, compounded quarterly, and at the end of the tenure you receive the total of all your deposits plus accumulated interest. RDs are particularly suited to short-term saving goals — a vacation, a wedding, school fees, an annual insurance premium — where you want a guaranteed outcome and don't want to worry about market movements.

The RD maturity formula is mathematically a future value of annuity calculation, similar to SIP, but with quarterly compounding and discrete monthly contributions. Each monthly deposit compounds for a different number of quarters depending on when it was made — your first deposit compounds for the entire tenure, while your last deposit compounds for just a fraction of a quarter. The closed-form formula bundles these into a single calculation. Use this RD calculator to plan exactly how much you need to save monthly to hit a specific goal amount.

RD rates in India typically mirror FD rates of the same tenure at the same bank. As of 2025, top private banks pay around 7-7.5% on 1-3 year RDs, public sector banks pay 6.5-7%, and small finance banks go up to 8-8.5%. Senior citizens get an extra 0.25-0.75% across most banks. India Post offers a 5-year RD with rates set quarterly by the government — currently around 6.7-6.9% — backed by sovereign guarantee.

Use RDs for goals that are 1-3 years out. For longer goals, the math typically favours equity SIPs even after factoring in the much higher volatility. A ₹5,000 monthly RD at 7% for 10 years matures to ₹8.65 lakh, while the same SIP in an equity fund at 12% (assumed) grows to ₹11.6 lakh. The 35% extra wealth from the SIP comes with the cost of needing to live with year-to-year fluctuations, but for goals beyond 7-10 years, the historical evidence strongly favours equity.

Taxation is straightforward but unfavourable. RD interest is fully taxable as 'Income from Other Sources' at your slab rate. Banks deduct TDS at 10% once your interest from that bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). For someone in the 30% tax bracket, an apparent 7% RD effectively yields around 4.9% post-tax, barely above inflation. This is the structural reason why RDs make sense for short-term saving discipline rather than long-term wealth building.

Premature closure of an RD is allowed but expensive. The penalty is typically 0.5-1% on the applicable interest rate, and the interest paid may be calculated at the rate that would have applied for the actual tenure rather than the originally agreed rate. Plan tenures carefully to avoid having to break the RD; use a separate emergency fund (in a savings account or short-term liquid fund) for unexpected expenses.

A flexible alternative worth knowing about is the Flexi RD or Variable RD offered by some banks, where you can vary the monthly deposit between a minimum and a maximum amount. This suits people whose monthly cash flow varies. Post Office's Recurring Deposit, with a 5-year fixed tenure and the ability to extend by another 5 years, remains a popular choice for very conservative savers who prefer sovereign backing over higher rates from small finance banks.

The disciplined nature of an RD — the bank auto-debits the same amount every month — is its real value. For people who struggle to save consistently, an RD removes the monthly decision and turns saving into a habit. Combined with a small ELSS SIP and a separate emergency fund, an RD can be the foundation of a starter saving plan for a young earner.