Enter your monthly deposit amount, rate, and tenure. See the exact maturity value and how much of it is interest versus what you put in.
An RD calculator answers the question most bank customers never bother to check: if I put Rs.5,000 in every month at this rate, what do I actually walk away with at the end? The answer involves quarterly compounding, which makes the manual calculation more tedious than it looks. Type in your deposit, rate, and tenure. You get the maturity amount, total interest earned, and a month-by-month breakdown of how the balance builds.
An RD works like a SIP for bank savings. Commit to a fixed amount every month. The bank takes it automatically and pays you interest quarterly, compounded on each deposit from the month it was made. The first deposit earns interest for the full tenure. The last deposit earns interest for one month. The total interest is the sum of what each deposit earned across its own remaining tenure. This is why RD interest is always slightly lower than an equivalent lump sum FD, and why the calculator matters: the math is not immediately obvious.
Before opening an RD, a few things worth working out:
RD uses quarterly compound interest. Each monthly deposit gets its own compounding calculation from the month it was made:
M = P × (1 + r/n)^(nt)
What each variable means:
The total maturity value is the sum of these individual calculations for all 60, 24, or however many monthly deposits you make. The calculator runs this for each deposit and adds them up.
Worked example: Rs.5,000 per month at 6.5% p.a. for 5 years (60 months)
The first Rs.5,000 deposit earns interest for all 60 months. The last Rs.5,000 deposit earns interest for one month only. Every other deposit falls somewhere between those two extremes. The total interest of Rs.54,000 reflects this graduated structure, which is why it comes out lower than a Rs.3 lakh lump sum FD at the same rate and tenure.
An RD is a structured monthly savings product. You commit to depositing a fixed amount every month, the bank holds it and pays interest compounded quarterly on each deposit from the month it was made, and at the end of the tenure you receive everything back as a single maturity payout. The minimum tenure at most banks is 6 months and the maximum is 10 years. The rate is fixed at account opening and stays locked for the full tenure. RDs are not the highest-earning product available, but they are simple, safe, and DICGC-insured up to Rs.5 lakh per depositor per bank.
The difference is timing. FD requires a lump sum upfront. RD takes a small fixed amount every month. Someone who has Rs.3 lakh sitting idle invests it as an FD and earns interest on the full amount from day one. Someone who saves Rs.5,000 a month opens an RD and builds the corpus over time. The FD earns more interest for the same total amount and same rate because the full principal is earning from day one. In an RD, the last deposit earns interest for only one month while the first deposit earns for the full tenure. On the same Rs.3 lakh over 5 years at 6.5%, an FD earns roughly Rs.1.12 lakh. An RD built up to Rs.3 lakh in 5 years earns roughly Rs.54,000. Both are equally safe. Choose based on whether you have the lump sum or prefer monthly savings discipline.
Most banks accept RD deposits from Rs.100 to Rs.500 per month as the minimum, with no upper ceiling. Post Office RD starts at Rs.100 per month. Senior citizens get an additional 0.25% to 0.50% above the standard rate at most banks. Tenure is 6 months to 120 months at private and public sector banks. Post Office RD has a fixed 5-year tenure. NRIs open NRE or NRO RD accounts but at rates that are typically slightly lower than resident Indian rates. Premature closure policies and penalty rates vary by bank.
Closing an RD before maturity is allowed at most banks but costs you. The penalty is typically 0.5% to 1% deducted from the interest you would have earned up to the closure date. Some banks also require a minimum lock-in period of 3 to 6 months before they allow premature closure at all. Before closing, check whether a loan against the RD works better for your situation. Most banks lend 85% to 90% of the current RD value at a rate of 1% to 2% above the RD interest rate. If you need Rs.40,000 from a Rs.50,000 RD with 2 years remaining, the loan route keeps the deposit intact and the interest earning. The penalty route closes everything and forfeits some interest.
Missing an RD instalment is not catastrophic but it costs money. Banks charge a penalty of Rs.1 to Rs.5 per Rs.100 per month of the missed deposit amount. Some banks offer a 1 to 2 month grace period before applying the penalty. Repeated defaults lead to the account being discontinued, which triggers a premature closure with penalty. The simplest prevention is an auto-debit mandate from your salary account with the monthly RD debit scheduled 2 to 3 days after salary credit. Banks allow standing instructions for this. Set it up when you open the account and do not think about it again.
RD interest is taxable as income from other sources at your applicable slab rate. The bank deducts TDS at 10% if your total interest from that bank across all deposits crosses Rs.40,000 in a financial year (Rs.50,000 for senior citizens). The RD interest accrues monthly even though you collect it at maturity, so you report it on an accrual basis in your ITR each year rather than in a single lump sum in the maturity year. If your total income is below the basic exemption limit, submit Form 15G (or 15H for senior citizens) to the bank at the start of each financial year to avoid the TDS deduction. The only RD with a Section 80C deduction is the 5-year Post Office RD.
Small Finance Banks like Ujjivan, Equitas, and Jana typically offer the highest RD rates at 7% to 8.5%, significantly above the 5.5% to 7% at public sector banks. Post Office RD sits at approximately 6.7%, backed by the full faith of the government. The DICGC insurance of Rs.5 lakh per depositor per bank covers most retail RD amounts at any regulated bank. For amounts well within that Rs.5 lakh limit, a Small Finance Bank at 8% is genuinely better than an SBI at 6% with no meaningful safety difference. For amounts above Rs.5 lakh, stick to large nationalised banks or spread across multiple institutions to stay within the insurance ceiling at each.
Opening multiple RD accounts at the same bank or different banks is unrestricted. Each account is independent with its own maturity date and tenure. Two practical approaches: laddering and goal-based separation. Laddering means opening a new RD every 3 or 6 months so accounts mature at regular intervals. After the first round of maturities, you always have an RD maturing within 6 months, giving near-term liquidity without breaking active accounts. Goal-based separation means opening one RD for school fees due in 18 months, another for a car purchase in 3 years, and so on, so the timing and amount of each account match the specific requirement. Before opening multiple accounts, confirm your monthly cash flow covers all simultaneous debits.
RD and SIP answer different questions. RD is for money you need within 1 to 3 years at a known date, where a 10% market drop is not acceptable. Emergency fund, a planned purchase, a down payment. You know what you get and when. SIP in equity mutual funds is for money you do not need for 7 to 10 years, where a 10% annual return over that horizon is more important than year-to-year stability. The right allocation between them depends on your time horizon, not a preference for safety or returns. Someone building an emergency fund puts money in an RD. Someone building a retirement corpus puts money in a SIP. Most people need both running simultaneously for different purposes.
Post Office RD is 100% government-backed, which is the strongest possible guarantee. The rate is approximately 6.7% for the current quarter, the minimum deposit is Rs.100 per month, and the tenure is fixed at exactly 5 years. The 5-year Post Office RD is the only RD that qualifies for a Section 80C deduction on the principal deposited, which adds meaningful value for someone in the 20% or 30% tax bracket. Bank RDs offer shorter tenures (6 months to 10 years), online management, easier premature closure, and rates from 5.5% to 8.5% depending on the bank. If the tenure flexibility or higher rate matters, choose a bank. If the Section 80C deduction and sovereign guarantee matter, choose the Post Office.
The monthly RD instalment is fixed at account opening and stays fixed for the full tenure. Increasing it means opening a second RD for the additional amount. Reducing it means closing the current account with the premature closure penalty and opening a fresh one at the lower amount. This rigidity is a feature as much as a limitation: it enforces discipline and prevents gradual reductions in saving. Open a conservative amount you are confident about maintaining every month. If your income grows and you want to save more, add a new RD on top. The fixed commitment means you never accidentally save less than planned.
