💼 Monthly Term Deposit Scheme

Recurring Deposit (RD) Calculator

Calculate maturity returns of monthly recurring term deposits with standard quarterly compounding.

RD Parameters

₹5,000
₹
6.8%
%
5 Years

RD Maturity Summary

Total Principal Deposited: ₹3,00,000
Estimated Interest Earned: ₹58,408
Total Maturity Value: ₹3,58,408

Detailed RD Accumulation Schedule

Observe how your monthly installments gather and build up compound interest quarterly.

Period Opening Balance Installments Deposited Interest Added Closing Balance

What is a Recurring Deposit (RD) & How it Works?

A **Recurring Deposit (RD)** is an extremely popular investment tool offered by post offices and commercial banks throughout India. Unlike a Fixed Deposit, where you need to invest a large sum of money all at once, an RD allows you to deposit a fixed, affordable amount of money **every calendar month** for a chosen term.

RD accounts encourage self-discipline by mandating a monthly installment payout. FDs and RDs share identical interest rate offerings, tax brackets, and senior citizen premiums. It offers the exact safety of term deposits since the interest rate remains locked in when the account is opened.

Recurring Deposit Interest Calculation Formula

Standard commercial banks compound RD interest **quarterly** (every 3 months). The mathematical formula utilized to calculate the final maturity amount ($M$) of an RD is:

$$M = P \times \frac{(1 + i)^n - 1}{1 - (1 + i)^{-1/3}}$$
Where:
• $M$ = Final Maturity Value of the Recurring Deposit.
• $P$ = Monthly Installment Amount.
• $i$ = Quarterly interest rate, derived as $\frac{R}{400}$ where $R$ is the nominal interest rate p.a.
• $n$ = Number of compounding quarters. For a term of $T$ months, $n = \frac{T}{3}$ quarters.

This formula reflects that your first monthly installment earns interest for the full term, while subsequent monthly contributions compound for progressively shorter time spans.

RD Features & Late Payment Penalties

• **Tenure and Thresholds**: Standard bank RD tenures range from **6 months to 10 years** in multiples of 3 months. Monthly contributions can start from as low as ₹100.
• **TDS (Tax Deducted at Source)**: Interest earned from Recurring Deposits is fully taxable based on your tax slabs. Similar to FDs, banks will deduct TDS at 10% if the combined interest earned on all term deposits in the fiscal year exceeds ₹40,000 (₹50,000 for senior citizens).
• **Default Penalties**: If you miss your monthly RD installment payment, banks will charge a small penalty (normally ₹1 or ₹2 per ₹100 installment per month) and can suspend your account if deposits remain unpaid for several months.

Recurring Deposit FAQs

What is the grace period for an RD monthly installment?
Most Indian banks offer a small grace period of **5 to 10 days** from the scheduled monthly payment date. If the installment is paid before this grace period ends, no default penalty is charged.
Can I change the monthly deposit amount during the RD tenure?
No. The monthly installment amount is fixed when the Recurring Deposit account is opened and **cannot be modified** during the entire tenure. If you want to invest a larger amount monthly, you must open a separate RD account.
Is senior citizen premium applicable for RDs?
Yes. Just like Fixed Deposits, banks offer senior citizens (aged 60 and above) an **additional 0.50% p.a. interest rate** on Recurring Deposits across all tenures.
Can I take a loan against my Recurring Deposit?
Yes! You can typically secure a **loan or overdraft facility** up to 90% of your accumulated RD balance. The interest charged on the loan is usually 1% to 2% above the RD interest rate you are earning.