RD Calculator

A Recurring Deposit (RD) is a savings instrument where you deposit a fixed amount every month for a chosen tenure and earn compound interest on it. Unlike a Fixed Deposit (FD), which requires a one-time lump sum investment, an RD accepts monthly installments — making it ideal for salaried individuals who want to save systematically. FD typically earns slightly higher effective interest because the full principal earns from day one, while in an RD each installment earns for a different duration. Both RD and FD interest are fully taxable as income from other sources at your applicable slab rate.

Most banks allow premature closure of an RD with a penalty of 1% on the interest rate applicable for the actual period held. For example, if you had booked an RD at 7% for 3 years but close it after 1 year, the bank will pay interest at the 1-year rate minus 1%. Post Office RD has stricter rules — it cannot be closed before completing 3 years, except in cases like the death of the depositor. Some digital-first banks now offer more flexible premature closure terms, so always check the fine print before opening.

Yes, RD interest is fully taxable as "Income from Other Sources" and must be added to your total income each year, even if you have not yet received it. It is taxed at your applicable income tax slab rate (5%, 20%, or 30%). Banks deduct TDS at 10% if total interest from all deposits at that bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If your total income is below the taxable limit, submit Form 15G (below 60 years) or Form 15H (60 and above) at the beginning of each financial year to avoid TDS deduction.

The minimum monthly deposit for most bank RDs is ₹100, though some banks set a higher minimum of ₹500 or ₹1,000. Post Office RD accepts deposits from ₹100 per month in multiples of ₹10. There is no upper limit on the monthly deposit amount, and you can open multiple RD accounts simultaneously at different banks or the Post Office if you want to save more or stagger maturities across time periods.

If you miss an RD installment, the bank charges a default penalty of ₹1–2 per ₹100 per month on the missed installment amount. You can deposit the missed installment along with the penalty in a subsequent month. If three consecutive installments are missed, many banks treat the RD as defaulted and may close it prematurely with applicable penalty on the interest. Setting up an auto-debit from your salary account is the easiest way to prevent missed installments entirely.

No, the monthly deposit amount is fixed at the time of opening the RD and cannot be changed during the tenure. If you want to save a higher amount, you need to open a fresh RD with the new amount — either at the same bank or a different one. Many people run multiple RDs simultaneously, each with a different amount and maturity date, to give themselves flexibility in both the savings amount and when funds become available.

Post Office RD carries a sovereign guarantee from the Government of India, making it the safest RD option available — safer than bank RDs, which are insured only up to ₹5 lakh by DICGC. The Post Office RD currently offers 6.7% p.a. compounded quarterly for a fixed 5-year tenure. Bank RDs offer more flexibility in tenure (6 months to 10 years) and may offer higher rates, especially small finance banks. Choose Post Office RD if safety is your top priority and a 5-year horizon suits you; choose bank RD for more tenure flexibility or better rates.

Yes, NRIs can open RDs in India through two account types. NRE RD (Non-Resident External) is rupee-denominated, interest is tax-free in India, and both principal and interest are fully repatriable to the NRI's foreign country. NRO RD (Non-Resident Ordinary) is for Indian-sourced income such as rent or dividends — interest is subject to TDS at 30% and repatriation is capped at USD 1 million per year. NRIs cannot open Post Office RDs after acquiring non-resident status.

RD and SIP serve different risk profiles and investment horizons. RD provides guaranteed, risk-free returns (currently 6–8% p.a.) with DICGC or sovereign protection — ideal for goals within 1–3 years where capital safety is paramount, such as a car down payment or a child's school fees. SIP in equity mutual funds targets higher returns (historically 10–15% p.a. over 7+ years) but with market risk and potential short-term volatility. Many financial planners recommend using RD for near-term goals and SIP for long-term wealth creation, rather than choosing one over the other.

Indian banks and the Post Office compound RD interest quarterly — meaning interest is calculated and added to the balance every three months. This is the standard method mandated by RBI guidelines for bank RDs and by the Ministry of Finance for Post Office RDs. Some calculators use monthly compounding for simplicity, which gives a slightly higher result. When comparing bank offers, always check whether the stated rate is under quarterly or monthly compounding to make an accurate comparison.

Yes, you can open as many RD accounts as you like across different banks and the Post Office simultaneously. There is no restriction on the number of RDs you can hold. Running multiple RDs with staggered maturity dates — a technique called RD laddering — gives you regular access to funds throughout the year while ensuring your money is always earning RD-level interest. This is a popular strategy for managing short-to-medium term financial goals like school fees, insurance premiums, or annual vacations.

If a nominee is registered on the RD, the bank or post office will pay the maturity amount (or the balance with applicable interest up to the date of death) directly to the nominee upon production of the death certificate and nominee's KYC documents — a relatively quick process. If no nominee is registered, the legal heirs must produce a succession certificate or probate from a court, which can take months and incur legal costs. This is why adding a nominee when opening any deposit account is strongly recommended and takes only a few minutes.