What is Recurring Deposit?
A Recurring Deposit is a savings scheme that allows you to invest a fixed amount every month for a specific period. It’s ideal for disciplined savers and offers interest compounded quarterly or monthly depending on the institution.
How is RD Interest Calculated?
The maturity value of an RD is calculated using the following formula:
M = P × (1 + r/n)nt
- M = Maturity amount
- P = Monthly installment
- r = Annual interest rate (in decimal)
- n = Compounding frequency (usually 4 for quarterly)
- t = Tenure in years
Benefits of Recurring Deposits
- Helps build a disciplined saving habit
- Assured returns with minimal risk
- Ideal for short- to medium-term financial goals
- Can be opened with small monthly deposits
- Available with most banks and post offices
How to Use the RD Calculator?
Using the RD calculator is simple. Enter your monthly deposit amount, select the tenure in months, and input the annual interest rate. The calculator will show you the total maturity value and interest earned instantly.
Frequently Asked Questions (FAQs)
What is a Recurring Deposit (RD)?
A Recurring Deposit allows you to deposit a fixed amount monthly for a fixed term. It earns interest similar to a fixed deposit but is suitable for people who prefer small monthly savings.
How does an RD calculator help?
It quickly shows your maturity amount and total interest earned, helping you visualize your savings plan and compare between banks or durations without manual calculations.
Is TDS applicable on RD interest?
Yes, if interest from all RDs with a bank exceeds ₹40,000 (₹50,000 for senior citizens), TDS is applicable. You can avoid it by submitting Form 15G or 15H, if eligible.
Can I break my RD before maturity?
Yes, premature closure is allowed but may come with lower interest and penalties. It’s better to check your bank's terms and calculate the losses before closing early.
Is RD interest taxable?
Yes, the interest is added to your total income and taxed as per your income tax slab. Declare it while filing returns to avoid mismatch notices from the IT department.