Recurring Deposit (RD) Calculator

A recurring deposit turns a savings habit into a disciplined, fixed-rate product. Instead of parking one lump sum, you commit to depositing the same amount every month for the full term, and the bank pays a fixed rate on the growing balance. It suits people who save out of monthly income rather than from a windfall — the salary earner setting aside a slice each payday, for example.

The key thing to understand about an RD is that each instalment earns interest only for the time it stays invested. Your very first deposit earns interest for the whole term; the deposit you make in the final month earns interest for just one month. That is why an RD is modelled as a series of contributions, not as a single sum: the calculator adds up the future value of every instalment to the maturity date.

Most banks compound RD interest quarterly, but for a clean, comparable estimate this tool uses a monthly compounding convention — the annual rate is divided by twelve to get a monthly rate, and each of your deposits is grown forward to maturity. The result is a close approximation that lets you see the shape of the outcome and compare scenarios.

The headline figure is, like an FD, a pre-tax number. Interest on a recurring deposit is generally taxable as income, and banks may withhold tax once the interest crosses a threshold, so subtract your own tax rate to see your net return.

The most useful comparison is against a lumpsum fixed deposit. If you could deposit the entire amount up front, an FD would always beat an RD of the same total, because in the FD every unit of money earns interest for the full term from day one. The RD trades a little return for the practical reality that most people simply do not have the lump sum on hand — they accumulate it month by month. Seen that way, the RD is not competing with the FD so much as making the most of money you would otherwise spend.

Deposit 5,000 a month at 7% per year for 5 years — that is 60 monthly deposits with a monthly rate of 7% ÷ 12 ≈ 0.583%. Using M = 5,000 · [((1 + 0.00583)^60 − 1) / 0.00583], the RD matures at about 357,965. You deposited 300,000 of your own money and earned roughly 57,965 in interest. The same 300,000 placed as a single lumpsum FD for 5 years would mature higher, because every unit would have earned interest for the full term.

Missing an instalment usually triggers a small penalty and can, with some banks, lead to the account being closed if you miss several in a row — so set up a standing instruction. Withdrawing early carries a premature-withdrawal penalty much like an FD, and the effective rate is recalculated downward for the period you actually saved. If your goal is a lump sum on a fixed date, an RD is ideal; if you already hold the full amount, compare against the fixed deposit calculator before committing.