What is a recurring deposit?
A recurring deposit (RD) lets you save a fixed amount every month and earn fixed-deposit-like interest on it. It builds a savings habit without needing a large amount upfront, and the rate is locked in when you open the account. RDs are offered by almost every bank and by India Post.
How to use the RD calculator
- Monthly deposit: the amount you will deposit every month.
- Interest rate: the annual rate offered by your bank for that tenure.
- Tenure: the number of months, usually in multiples of 3.
RD maturity formula
Each instalment is compounded quarterly for the time it stays in the account. The first instalment earns interest for the full tenure, the last one for just one month:
- M = maturity value
- R = monthly instalment
- r = annual interest rate (as a decimal)
- m = months that instalment stays invested (tenure down to 1)
Worked examples
| Monthly deposit | Rate | Tenure | Deposited | Maturity |
|---|---|---|---|---|
| ₹5,000 | 7% | 12 months | ₹60,000 | ₹62,311 |
| ₹2,000 | 6.5% | 24 months | ₹48,000 | ₹51,370 |
| ₹5,000 | 7% | 60 months | ₹3,00,000 | ₹3,59,664 |
Bank calculators can differ by a few rupees because of rounding and the exact day each instalment is credited.
RD vs FD
- RD suits people who save from a monthly salary and do not have a lumpsum.
- FD earns more on the same total amount, because all the money earns interest from day one. Try the FD calculator to compare.
- Banks usually offer the same interest rate for an RD and an FD of the same tenure.
Who should use an RD?
- Anyone saving for a goal 1–3 years away, like a holiday, a gadget or a wedding expense.
- First-time savers who want a guaranteed, low-risk habit.
- People who want to build an emergency fund month by month.
For goals more than 5 years away, compare with a mutual fund SIP, which has historically beaten inflation by a wider margin, though with market risk.
Frequently asked questions
How is RD interest calculated?
Banks in India calculate recurring deposit interest with quarterly compounding. Each monthly instalment earns compound interest for the months remaining until maturity, and the maturity value is the sum of all instalments with their interest.
What is the minimum amount and tenure for an RD?
Most banks accept RDs from ₹100 a month, with tenures from 6 months to 10 years, in multiples of 3 months. The post office RD has a fixed 5-year tenure.
What happens if I miss an RD instalment?
Banks usually charge a small penalty for a missed or late instalment and may close the account after several missed payments. The maturity value also falls, because the missed money earns no interest.
Is RD interest taxable?
Yes. RD interest is taxed at your income tax slab rate, like FD interest, and banks deduct TDS when your total interest from the bank crosses the yearly threshold.
Is RD better than SIP?
An RD gives a guaranteed return with no market risk, which suits short-term goals and emergency savings. An equity SIP carries market risk but has historically earned more over periods of 5 years or longer.
Sources
Last updated 19 September 2026. Results are estimates for planning only and are not investment, tax or legal advice. See our disclaimer.