Recurring Deposit Calculator

Each Deposit Earns Interest for a Different Length of Time

Unlike a lump-sum FD where the entire amount earns interest for the full tenure, an RD's first deposit earns interest for the whole period while the last deposit earns interest for barely any time at all. This is why RD maturity is calculated using an annuity-style formula rather than a simple rate-times-tenure calculation — each monthly installment contributes a different amount of interest depending on how long it's been sitting in the account.

Worked Example

₹5,000 monthly deposit for 12 months at 6.5% p.a.:

Tax and Early Withdrawal

RD interest is fully taxable at your income-tax slab rate, with the same TDS rules as fixed deposits — banks commonly deduct TDS once your total interest from that bank crosses ₹40,000 in a year (₹50,000 for senior citizens). Premature closure is usually allowed but typically comes with a reduced interest rate (often 1-2% lower than what you'd have earned for the period actually completed), so breaking an RD early costs you more than just losing future deposits' interest. If your total income for the year is below the taxable threshold, you can avoid TDS by submitting Form 15G (or Form 15H if you're a senior citizen) to the bank, the same as you would for an FD.

A missed monthly installment is a separate issue from early closure. Most banks charge a small penalty per missed or delayed instalment rather than treating it as a withdrawal, and a pattern of repeated defaults can eventually lead the bank to close the account prematurely at the reduced rate. Since the exact penalty amount and grace period differ by bank, check your passbook or account terms rather than assuming a fixed figure.

RD vs FD: Which Fits Your Situation

An FD asks you to commit a lump sum you already have; an RD asks you to commit a fixed amount every month out of income you haven't received yet. That difference in starting point is really what decides which one fits — an RD works well when the goal is building savings discipline out of a salary or business income, since the bank locks in a monthly outflow the way a SIP does for mutual funds. An FD makes more sense when you already have a lump sum sitting in a savings account and want it earning a fixed rate immediately, rather than trickling in over months.

On rate, the two products from the same bank are usually close to each other for a matching tenure — a bank offering 7% on a 12-month FD will typically offer a similar rate, sometimes the same figure, on its 12-month RD. The bigger driver of your total return isn't which product you pick, it's how much of your money is earning interest for how long — which is exactly why an RD's effective yield on the amount actually deposited works out lower than an FD's yield on its full principal, even at an identical quoted rate, because RD instalments spend less average time in the account.

How the Maturity Amount Changes With Rate

Using the same ₹5,000 monthly deposit over 12 months, here's how the maturity amount shifts as the quoted rate moves — calculated with the same formula the calculator above uses:

A one percentage point difference in the quoted rate moves the interest earned on a one-year, ₹5,000/month RD by roughly ₹340 — a smaller swing than the same rate move would produce on an equivalent lump-sum FD, again because RD instalments carry a shorter average holding period than a single upfront deposit.

Senior Citizen RD Rates

Many banks extend the same preferential-rate treatment to RDs that they offer on FDs — commonly around 0.5 percentage points above the general rate for a matching tenure, though the exact premium varies by bank and can change with each rate revision. If you qualify, check whether your bank applies the senior citizen rate to its RD product automatically or requires a specific account type or declaration — this isn't always identical to how the FD senior rate is applied at the same branch.

DICGC Insurance on RD Balances

An RD is a fixed-rate deposit, not a market-linked product — the rate you locked in at opening doesn't move with market conditions during the tenure. Like FD and savings balances, RD balances are insured by DICGC (a deposit insurance body that is a wholly owned subsidiary of the RBI) up to ₹5 lakh per depositor per bank, with all your accounts at that bank — RD, FD, savings, and current combined — counted together against that single ₹5 lakh cap. If your total balances at one bank, RD included, are likely to cross that figure, spreading deposits across more than one bank keeps a larger share of your money within the insured limit.

Post Office RD as an Alternative

India Post also runs a 5-year Recurring Deposit scheme, which is government-backed rather than run by a commercial bank. Like other small savings schemes, the rate is notified quarterly by the government rather than set independently by each branch, so it can move between quarters — check the current notified rate before comparing it against a bank RD rather than relying on a figure that may be out of date. The mechanics are similar to a bank RD: a fixed monthly instalment over a fixed tenure, maturing to a lump sum, though the exact compounding convention and minimum instalment differ from what individual banks offer.

Using an RD to Build Toward a Specific Goal

Because an RD locks in both the monthly instalment and the rate at the time of opening, it works well as a planning tool when you know roughly what you're saving toward and by when — a wedding, a down payment, an annual insurance premium, or a tax payment due at a known date. Once you've fixed the monthly amount and the tenure, the maturity value is set (assuming you don't miss instalments), which makes an RD easier to budget around than a market-linked SIP where the end value isn't known in advance.

The trade-off is that this predictability comes at the cost of upside — an RD's fixed rate means you won't benefit if markets or rates move in your favor during the tenure, the same way you wouldn't be exposed to a downturn either. For short, fixed-horizon goals where you can't afford to fall short of a known target amount, that predictability is usually the point rather than a drawback. For longer horizons where some volatility is tolerable, an RD tends to be compared against a SIP into a debt or hybrid mutual fund instead, where the potential return is higher but not fixed.

Flexi and Recurring Deposit Variants

Beyond the standard fixed-instalment RD modeled by the calculator above, some banks offer "flexi" RD variants that allow you to vary the monthly deposit amount within a specified minimum and maximum band, rather than committing to one fixed figure for the entire tenure. This can suit variable income — for example, a business owner or commission-based earner who wants the savings discipline of an RD without committing to an identical instalment every single month. Because a flexi RD's maturity value depends on exactly how much you deposit each month, it can't be projected with the same precision as a standard fixed-instalment RD, and the interest calculation convention can differ from bank to bank — check the specific product's terms before assuming it behaves identically to the standard RD described throughout this guide.