How is RD maturity amount calculated?

RD maturity is calculated using the formula: M = P x [(1 + r/n)^(nt) - 1] / (1 - (1 + r/n)^(-1/3)), where P is monthly deposit, r is annual interest rate, n is compounding frequency (4 for quarterly), and t is tenure in years.

What is the minimum RD amount?

The minimum monthly deposit for RD varies by bank. Most banks accept RD starting from Rs. 100 to Rs. 500 per month. Post Office RD minimum is Rs. 100.

Can I skip RD installments?

Missing RD installments attracts a penalty (usually Re. 1 per Rs. 100 per month). Continuous defaults may lead to premature closure or conversion to FD at lower rates.

What is the difference between RD and SIP?

RD offers fixed, guaranteed returns and is suitable for conservative investors. SIP invests in mutual funds with market-linked returns, offering potentially higher but variable returns with higher risk.

RD Calculator: Recurring Deposit Interest

Q: Is RD interest taxable?

Yes, RD interest is fully taxable as per your income tax slab. TDS is deducted at 10% if total interest from all FDs/RDs in a bank exceeds Rs. 40,000 per year.

What is Recurring Deposit (RD)?

A Recurring Deposit (RD) is a systematic savings instrument where you deposit a fixed amount every month for a predetermined tenure, earning interest similar to Fixed Deposits. RDs are ideal for salaried individuals who want to build savings gradually without investing a lump sum.

RDs combine the safety of FDs with the flexibility of monthly investments. They help build a savings habit while earning guaranteed returns, making them perfect for short to medium-term financial goals.

How is RD Maturity Calculated?

RD uses quarterly compounding in most banks. Since each monthly installment earns interest for a different duration, the calculation is complex:

                        M = P × [(1 + r/n)^(nt) - 1] / [1 - (1 + r/n)^(-1/3)]
                    

Where:

M = Maturity Amount
P = Monthly Deposit
r = Annual Interest Rate
n = Compounding Frequency (4 for quarterly)
t = Tenure in Years

This calculator uses a simplified SIP-style formula for approximation, which gives results close to actual bank calculations.

Key Features of Recurring Deposits

Minimum Deposit: ₹100 to ₹500 per month (varies by bank)
Maximum Deposit: No upper limit in most banks
Tenure: 6 months to 10 years
Interest Rate: Similar to FD rates (6-7.5% currently)
Penalty: Charged for missed installments
Premature Closure: Allowed with penalty

RD Interest Rates in January 2026

Current RD rates across major banks:

SBI: 6.50% - 7.00%
HDFC Bank: 6.75% - 7.25%
ICICI Bank: 6.50% - 7.00%
Post Office RD: 6.70% (Q4 FY 2025-26)

Senior citizens get additional 0.25-0.50% in most banks.

RD vs SIP: Which is Better?

Feature	RD	SIP
Returns	Fixed (6-7%)	Variable (10-15% historically)
Risk	Zero	Market-linked
Best For	Short-term goals	Long-term wealth

Frequently Asked Questions (FAQs)

What happens if I miss an RD installment?

Most banks charge a penalty of ₹1 per ₹100 for each month of delay. Continuous defaults (typically 3-4 months) may lead to premature closure or conversion to FD at lower rates.

Can I increase my RD amount mid-tenure?

No, you cannot change the monthly amount in an existing RD. You would need to open a new RD with the higher amount if you want to save more.

Is RD interest taxable?

Yes, RD interest is fully taxable. TDS at 10% is deducted if your total FD/RD interest in a bank exceeds ₹40,000 per year (₹50,000 for senior citizens).

Can I take a loan against RD?

Yes, most banks offer loans up to 80-90% of the RD balance at interest rates 1-2% above the RD rate.

What is Post Office RD rate?

Post Office RD rate for Q4 FY 2025-26 (January-March 2026) is 6.70% per annum, compounded quarterly. Post Office RDs have a 5-year tenure only.