RD Calculator

RD interest is calculated using the quarterly compounding formula: M = P × [(1 + i)^n - 1] / [1 - (1 + i)^(-1/3)], where M is maturity amount, P is monthly deposit, i is quarterly interest rate (annual rate ÷ 4), and n is number of quarters (tenure in years × 4). For example, depositing ₹5,000 monthly at 7% for 3 years: i = 0.07/4 = 0.0175, n = 3 × 4 = 12 quarters. M = 5,000 × [(1.0175)^12 - 1] / [1 - (1.0175)^(-1/3)] ≈ ₹1,93,183. Total deposits = ₹5,000 × 36 = ₹1,80,000, interest earned = ₹13,183. Most Indian banks use quarterly compounding as standard, providing better returns than simple interest. Post office RDs also follow quarterly compounding. The compounding effect becomes more significant with longer tenures and higher monthly deposits.

As of FY 2024-25, RD interest rates in India range from 6.5% to 8% depending on the bank and tenure. State Bank of India offers 6.5% to 7.0%, HDFC Bank provides 6.7% to 7.25%, ICICI Bank offers 6.7% to 7.2%, and Axis Bank provides 6.8% to 7.3%. Small finance banks like Ujjivan, Equitas, and Jana Small Finance Bank offer higher rates between 7.5% to 8.5%. Senior citizens receive an additional 0.25% to 0.75% premium over regular rates. Post office RD currently offers around 6.7% to 7.2% depending on tenure with government backing. RD rates are typically aligned with FD rates for similar tenures. Interest rates are revised quarterly based on RBI monetary policy and market conditions. Always verify current rates on your bank's official website or visit the branch before opening an RD account, as rates change periodically.

Yes, RD interest is fully taxable as "Income from Other Sources" under the Income Tax Act. The interest is added to your total income and taxed according to your income tax slab (5%, 10%, 20%, or 30%). Banks deduct TDS at 10% if your total interest from all RDs and FDs in that bank exceeds ₹40,000 per year (₹50,000 for senior citizens aged 60+). If you don't provide PAN, TDS is deducted at 20%. To avoid TDS when your total income is below taxable limit, submit Form 15G (if below 60 years) or Form 15H (if 60+ years) to your bank before the financial year starts. TDS deduction doesn't eliminate your tax liability—you must declare RD interest in your Income Tax Return and pay any balance tax or claim refund if excess was deducted. Unlike tax-saver FDs, RDs don't offer Section 80C deduction benefits on principal amount. Post office RDs have identical tax treatment.

Yes, premature withdrawal of RDs is allowed, but banks impose penalties typically ranging from 1% to 2% on the applicable interest rate. The penalty varies by bank, tenure completed, and remaining tenure. For example, if your RD was earning 7% and you withdraw prematurely after 2 years of a 5-year RD, the bank may recalculate interest at 6% or 5.5%, reducing your earnings significantly. Some banks have minimum tenure requirements (like 3 or 6 months) before allowing premature closure. Partial withdrawals are generally not allowed—you must close the entire RD. The penalty not only reduces the interest rate but is also applied to the interest earned, compounding the loss. To minimize penalties, try to match RD tenure with your goal timeline. If you need emergency funds, consider taking a loan against your RD instead (offered at 1-2% above RD rate), which keeps your RD intact and earning interest while providing liquidity.

Missing RD monthly installments attracts penalties ranging from ₹1 to ₹50 per missed installment depending on the bank and deposit amount. For example, SBI charges ₹1.50 per ₹100 of monthly installment. If you deposit ₹5,000 monthly and miss one payment, the penalty would be ₹75. Banks typically allow some grace period (5-15 days) without penalty. Prolonged default (usually 2-4 consecutive missed payments) may lead to account discontinuation, where the RD is prematurely closed with penalty interest rates. To regularize, you must deposit all missed installments along with penalties. Most banks offer revival facility within a specified period. To avoid missing payments, set up standing instructions or auto-debit from your savings account. Choose a monthly deposit date few days after your salary credit to ensure sufficient balance. Many banks now send SMS/email reminders before the due date. If facing genuine hardship, speak to your bank—they may allow temporary holding or reduction in monthly amount depending on circumstances.

The choice between RD and SIP depends on your risk tolerance, investment goals, and time horizon. RD advantages: guaranteed returns (6.5-8%), zero market risk, DICGC insurance up to ₹5 lakh, suitable for short-term goals (1-5 years), and loan against RD facility. RD disadvantages: lower returns compared to equity potential, fully taxable interest, and inflation may erode real returns. SIP advantages: potential for higher returns (10-15% historically in equity funds), tax-efficient (LTCG tax 10% above ₹1 lakh annually), rupee cost averaging, and wealth creation through compounding over long term (7-10+ years). SIP disadvantages: market risk with potential losses, requires longer tenure for returns, and no guaranteed returns. Recommendation: Use RD for short-term goals, emergency fund building, and if you're risk-averse. Use equity SIP for long-term wealth creation (retirement, children's education 10+ years away). Balanced investors maintain both: RD for stability and liquidity, SIP for growth. A 70-30 or 60-40 split between SIP and RD based on age and goals works well for many investors.

Yes, most banks offer loans against RDs (also called RD overdraft) up to 80-90% of the RD value accumulated till date. This provides emergency liquidity without breaking your recurring deposit. The interest rate on RD loans is typically 1% to 2% higher than your RD interest rate. For example, if your RD earns 7%, the loan rate would be 8-9%. Net effective cost = loan interest minus RD interest, resulting in just 1-2% cost. If you've accumulated ₹2 lakh in your RD earning 7%, you can get a loan of ₹1.6-1.8 lakh at 8-9% interest. Advantages include: (1) no RD premature closure penalty, (2) RD continues earning interest normally, (3) no credit score verification required, (4) quick approval within hours, (5) minimal documentation. The loan tenure matches your RD maturity period. You can repay anytime without prepayment charges. At RD maturity, outstanding loan is automatically adjusted from maturity proceeds, and balance is credited to your account. This makes RD loans ideal for temporary cash needs—medical emergencies, urgent home repairs, or business opportunities—without disrupting your savings plan.

Post Office RD and Bank RD have similar features with some key differences. Post Office RD advantages: government backing provides extra safety beyond DICGC, accessible in every pin code including rural areas, simpler account opening with minimal documentation, and interest rates comparable to public sector banks (6.7-7.2% currently). Post Office RD disadvantages: limited to physical branch transactions (no net banking), slower processing compared to digital banking, fewer tenure options, and less flexibility in premature withdrawal. Bank RD advantages: net banking and mobile app for account opening and monitoring, auto-debit facilities for hassle-free monthly deposits, wider range of tenure options, faster processing and customer service, and loan against RD available immediately. Bank RD disadvantages: DICGC insurance limited to ₹5 lakh per bank (though post office has government backing), slightly lower rates in some PSU banks. Recommendation: Choose Post Office RD if you prefer government safety, have post office accessibility, and don't need digital banking. Choose Bank RD if you want net banking convenience, already bank with them, and prefer digital experience. Interest rates are largely similar, so convenience and trust are deciding factors.

Yes, senior citizens (aged 60 years and above) receive preferential RD interest rates—typically 0.25% to 0.75% higher than regular rates depending on the bank. For example, if the regular RD rate is 7%, senior citizens get 7.25% to 7.75%. On a ₹10,000 monthly deposit for 5 years, this additional 0.5% translates to approximately ₹7,500 to ₹10,000 extra earnings—a significant benefit. SBI, HDFC, ICICI, and most major banks offer this senior citizen premium. Post office RD also provides senior citizen benefits. To avail, you must be 60+ on the date of opening the RD and provide age proof (Aadhaar, PAN, or birth certificate). Some banks also offer super senior citizen rates (additional 0.05% to 0.10%) for those aged 80+. Additionally, senior citizens have higher TDS threshold of ₹50,000 versus ₹40,000 for regular citizens, providing better tax convenience. Combined with pension income and conservative risk profile, RDs become highly attractive for senior citizens seeking guaranteed regular interest income for monthly expenses. The safety and assured returns align perfectly with retirement financial security needs.

Yes, most major banks now offer online RD account opening through net banking and mobile apps, making the process quick and paperless. If you have an existing savings account with the bank, RD opening takes just 5-10 minutes. Steps: (1) Login to net banking or mobile app, (2) Navigate to "Deposits" or "Investments" section, (3) Select "Recurring Deposit", (4) Enter monthly deposit amount, tenure, and choose auto-debit date, (5) Nominate beneficiary, (6) Accept terms and submit. The RD account is opened instantly with immediate confirmation and RD account number. Auto-debit is automatically set up from your savings account for the chosen date every month. You can monitor RD balance, accumulated interest, and maturity date online anytime. For non-customers, some banks like DBS, IDFC First, and RBL allow fully digital RD opening with video KYC, requiring Aadhaar, PAN, and self-attestation. This is especially convenient during the pandemic era. Online RD offers advantages: no branch visit, instant account opening, paperless process, easy tracking, and modification. However, senior citizens preferring physical banking can still open RD at branches with passbook facilities.