About RD Calculator
A Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount every month and earn interest compounded quarterly. The RD maturity formula provides a lump sum amount at the end of the tenure including the principal and interest earned.
When to Use This Calculator
RDs are perfect if you prefer small, regular savings instead of locking up a large lump sum. Use this calculator to plan for goals 1-5 years away, like a vacation, wedding expenses, or a down payment for a vehicle. It's also great for comparing RD rates across different banks — just plug in each bank's rate to see which one maximizes your returns. Salaried individuals can use it to set up a disciplined savings habit by automatically debiting a fixed amount each month from their salary account.
How to Use This Calculator
Enter your monthly deposit amount — for example, $5,000 per month. Set the annual interest rate your bank offers, typically 5-7% for RDs. Choose your tenure in years, say 5 years. Click Calculate to see your maturity amount, total deposits made, and total interest earned. The calculator uses quarterly compounding which is the standard for most bank RDs. Try different monthly amounts to see how increasing your monthly savings by even $500 impacts your final corpus.
How to Interpret Your Results
If you deposit $5,000 monthly for 5 years at 6.5% interest compounded quarterly, your maturity amount would be approximately $353,000. Your total deposits over 5 years amount to $300,000 (60 monthly payments), and the interest earned is about $53,000. The effective annual return considering quarterly compounding works out to about 6.7% — slightly higher than the nominal 6.5% due to the compounding effect. If you extend the tenure to 10 years, the maturity jumps to approximately $838,000 with interest of $238,000.
Frequently Asked Questions
Is RD interest taxable?
Yes, interest earned on RD is fully taxable as per your income tax slab. Banks deduct TDS at 10% if the total interest across all deposits exceeds $40,000 in a financial year. The interest is added to your income and taxed at your marginal rate. Senior citizens have a higher TDS threshold of $50,000. RD interest is treated as "Income from Other Sources" and must be reported in your tax return.
How does RD compare to SIP for regular investing?
RD and SIP both involve regular monthly contributions, but they serve different purposes. An RD is a fixed-income product offering guaranteed returns of 5-7%, making it suitable for short-term goals like saving for a vacation or emergency fund. A SIP invests in mutual funds with market-linked returns that can range from -10% to 20%+ annually, better suited for long-term wealth creation over 5+ years. The RD gives capital protection and predictable returns, while SIP offers higher growth potential with volatility. Many investors use RDs for near-term goals and SIPs for long-term retirement or child education planning.
What happens if I miss an RD installment?
If you miss an RD installment, most banks charge a penalty of $5-$25 per missed payment depending on the amount and bank policy. Some banks offer a grace period of 7-15 days before levying the penalty. Missing multiple consecutive installments can result in the RD being converted to a fixed deposit with a reduced interest rate or even closed prematurely. A few banks allow skipping a payment by paying double the next month, though this varies. Set up auto-debit from your savings account to avoid missing installments and protect your returns.
Can I prematurely close my RD account?
Yes, most banks allow premature closure of RD accounts but charge a penalty, typically 0.5-1% off the applicable interest rate. If your RD was earning 6.5% and the penalty is 1%, you would receive only 5.5% interest on the amount. Some banks do not pay any interest if the RD is closed within the first 3-6 months. The penalty structure varies by bank — check your RD terms before opening. If possible, consider a loan against your RD (banks typically offer 80-90% of the balance) instead of prematurely closing it to avoid losing interest.
What is the maximum and minimum RD tenure?
The minimum RD tenure in most banks is 6 months, and the maximum is typically 10 years. Common tenure options are 1, 2, 3, 5, and 10 years. Some banks offer flexible tenures in monthly increments (e.g., 12 months, 18 months, 24 months). The minimum monthly deposit amount is usually $500-$1,000, while the maximum is often capped at $100,000-$150,000 per month depending on the bank. Longer tenures benefit more from compounding — a 10-year RD at 6.5% earns significantly more total interest than two consecutive 5-year RDs due to the compounding effect on accumulated interest.