RD Calculator

What is Recurring Deposit or RD?

*Rates of interest are subject to change.

*Rates for senior citizens are higher than regular rates.

Features of RD Account

• Minimal monthly deposits: Most banks allow an RD account with a low minimum contribution and no upper limit.
• Tenure Range: You can start an RD for 12 months to 10 years.
• Rate of Interest: RD interest is higher than a savings account and similar to Fixed Deposit rates.
• Interest rate proportionate to RD tenure: Longer tenure earns higher returns. Compare before investing.
• Early Withdrawal: Allowed only after maturity; premature withdrawals attract penalties.
• Credit Value: You can take loans against your RD balance as collateral.
• Link with Bank Account: Easily linked with savings/current accounts for auto payments.
• Liquidity: Choose short-tenure RDs (like 1 year) for better liquidity and flexibility.
• Taxation Implication: Interest is taxable if annual earnings exceed ₹10,000. No TDS like FDs, but taxable income applies.
• NRI Eligibility: NRIs can open RDs linked with NRE accounts.

Advantages of Recurring Deposits

• High Interest Rate: RDs offer higher returns than savings accounts, ideal for regular savers.
• Inculcates Saving Habit: Helps build financial discipline through fixed monthly saving.
• Ideal for Homemakers: Suitable for low-income individuals and pensioners due to low contribution needs.
• Senior Citizens: Earn higher interest rates than regular customers.
• Ease of Saving: Fixed monthly contributions simplify saving and budgeting.

Recurring Deposit Calculation

Most banks compound the interest on Recurring Deposits on a quarterly basis.

The RD Calculation formula:

M = R [(1+i)ⁿ - 1]

• M: Maturity value
• R: Monthly contribution
• n: Tenure (number of months)
• i: Rate of interest divided by 400 (for quarterly compounding)

You can manually calculate the maturity value using the above formula or use an online RD calculator for quick and accurate results. Online calculators are free, instant, and hassle-free—just enter the monthly amount, tenure, and interest rate to get an estimated maturity value.

Comparing RD rates from various banks before investing helps you choose the most lucrative offer.

Recurring Deposits: Eligibility Criteria

• Indian residents and NRIs are eligible to open an RD account.
• Corporates, firms, proprietorships, and government organisations can also open RD accounts.
• Applicants must provide valid identity proof and KYC documents.
• Minors can open RD accounts under the guardianship of parents or legal guardians.
• Children above 10 years can independently open RDs with valid identity proof.

Documents Required for Recurring Deposits

• Duly filled RD application form (available online and offline).
• Recent passport-size photograph of the applicant.
• Valid identity proof and address proof (Aadhaar, PAN, Passport, etc.).
• KYC documents as per bank guidelines.
• Cheque for the first instalment or authorisation for standing instructions.

Once all documents and the application form are submitted, the RD account is usually activated within the next working day.

RD for Children's Future

Recurring Deposits are widely used by parents to secure their children’s future due to their safety, predictable returns, and flexibility. While SIPs and ELSS may offer higher returns, RDs are preferred for the following reasons:

• Hassle-free account opening and management.
• Minimal monthly contribution suitable for all income levels.
• Assured returns irrespective of market fluctuations.
• Easy on the pocket and encourages consistent saving habits.

Example:

Mr. and Mrs. Ajay Bhardwaj opened two RD accounts for their daughter — one with ₹2,000 per month for 3 years at 7.4% and another for 10 years at 7%.

• The first RD yielded ₹80,784 after 3 years — enough for initial schooling expenses.
• The second RD accumulated ₹3,47,403 after 10 years, which they planned to reinvest for higher education.

Even though inflation and tax effects are not considered in this example, RDs provide a stable and low-risk way to build an education fund for children.

RD for Retirement Planning

Starting an RD early in your career can play a vital role in building your retirement corpus. Saving small amounts consistently over the years leads to substantial long-term wealth accumulation.

Example: If you invest ₹2,000 per month at 7% interest for 30 years, you can accumulate approximately ₹10–12 lakhs. Since RDs typically have a maximum tenure of 10 years, you can reinvest the maturity amount into Fixed Deposits or Mutual Funds to grow your retirement savings further.

Recurring Deposits are among the safest and easiest options for building long-term savings, and online RD calculators make it simple to plan and compare the best offers from various banks.