Question 1

How is recurring deposit maturity calculated?

Accepted Answer

Each monthly installment earns compound interest for the remaining tenure, so earlier deposits earn more than later ones. Banks typically compound RDs quarterly. The calculator sums the compounded value of every installment to give the maturity amount, then splits it into how much you deposited versus how much is interest.

Question 2

What is the difference between an RD and an FD?

Accepted Answer

A fixed deposit invests one lump sum upfront, while a recurring deposit invests a fixed amount every month. An FD earns more in total because all the money compounds from day one, but an RD suits people saving from monthly income who don't have a lump sum. Both usually offer the same headline interest rate at a given bank.

Question 3

Is RD interest taxable?

Accepted Answer

Yes. In India, RD interest is fully taxable at your income slab and subject to TDS rules like an FD. The maturity value shown is before tax, so your net return is lower. After tax and inflation, an RD often only just holds its buying power, which is why longer goals are usually better served by market-linked SIPs.

Question 4

RD or SIP, which should I use?

Accepted Answer

Choose by goal and time frame. An RD gives a fixed, known maturity with no market risk, which suits short goals (one to three years) and money you can't afford to see fall, like an emergency buffer or a near-term purchase. A mutual-fund SIP carries market risk but has historically beaten fixed deposits and inflation over long periods, so it usually fits goals five-plus years away. Many savers use both: an RD for safety and SIPs for long-term growth. This is general information, not investment advice.

Question 5

What happens if I miss an installment or close an RD early?

Accepted Answer

Banks typically charge a small penalty for a missed or late monthly installment, and breaking an RD before maturity usually means you earn a lower interest rate plus a premature-withdrawal penalty, so the maturity value shown here won't be met. Exact penalties vary by bank, so check your bank's terms before you commit to a tenure. The calculator assumes every installment is paid on time and the deposit runs to maturity.

Recurring Deposit (RD) Calculator

How We Work It Out

Real-World Examples

Saving ₹5,000 a month for 5 years at 7%

Frequently Asked Questions (FAQ)

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