A Recurring Deposit (RD) is a term deposit product offered by banks and post offices that allows you to invest a fixed amount every month at a guaranteed interest rate. RDs are ideal for building a savings habit with small regular deposits. The RD calculator shows you the maturity amount and total interest earned over your chosen tenure.
How Is RD Interest Calculated?
RD interest is calculated using compound interest applied to each monthly instalment separately. Each instalment earns interest for the number of months remaining in the tenure. Banks compound quarterly; post office RDs also compound quarterly. The total maturity amount is the sum of all instalments plus their respective compound interest.
Bank RD vs Post Office RD
Bank RDs offer flexible tenures (6 months to 10 years) and slightly higher rates for senior citizens (0.25–0.5% extra). Post Office RDs have a fixed 5-year tenure at 6.7% p.a. Small finance banks often offer 7–8.5% for RDs, while large PSBs offer 6.5–7.25%. Choose based on rate, liquidity needs, and trust.
Premature Withdrawal and Loan Against RD
Most banks allow premature RD closure with a 0.5–1% interest reduction penalty. You can also take a loan against your RD — up to 80–95% of the deposit value — without breaking the RD, making it useful as emergency collateral.
Frequently Asked Questions
Is RD interest taxable?
Yes. RD interest is fully taxable at your income tax slab rate. TDS at 10% is deducted if total interest from all deposits at a bank exceeds ₹40,000/year (₹50,000 for senior citizens).
What is the minimum amount for an RD?
Most banks allow RDs from ₹100/month. Post Office RD requires a minimum of ₹100/month in multiples of ₹10.
Can I increase my RD amount mid-tenure?
No. RD amounts are fixed for the tenure. To increase the amount, open a new RD. Some banks offer 'flexible RDs' where you can deposit varying amounts within a range.
What happens if I miss an RD instalment?
A penalty of ₹1–2 per ₹100 per month is charged for missed instalments. Consecutive missed instalments (typically 6) may cause the account to close prematurely.