How is RD maturity calculated?
Each monthly instalment in a recurring deposit earns quarterly-compounded interest for the months it stays deposited, and all instalments are added to give the maturity value, so the first instalment earns the most and the last earns the least. Enter the monthly deposit, interest rate and tenure in FixDoks's RD Calculator to see the maturity value and total interest.
RD Calculator at a glance
| Inputs | Monthly deposit, interest rate, tenure |
|---|---|
| Output | Maturity value, interest earned, year-by-year value |
| Processing | In your browser; your files are not uploaded |
| Price | Free |
| Works on | Chrome, Edge, Safari and Firefox on Windows, Mac, Android and iPhone |
How to use RD Calculator
- Enter your monthly deposit.
- Enter the yearly interest rate from your bank or post office.
- Set the tenure in years and months.
- Read the maturity value and interest, and the value at the end of each full year.
How does a recurring deposit work?
A recurring deposit (RD) lets you save a fixed amount every month and earn fixed-deposit style interest. It suits salaried savers who cannot put a large sum aside at once. The rate is fixed on the day you open the RD and does not change for its term.
What is the RD maturity formula?
Indian banks and India Post compound RD interest every quarter. Each instalment earns interest for the months it stays in the account, so the first instalment earns the most and the last earns the least. Adding every instalment gives:
M = Σ R × (1 + r ÷ 400)k ÷ 3 for k = 1 to N
- R is the monthly deposit.
- r is the yearly rate in percent, so r ÷ 400 is the quarterly rate.
- k is the number of months that instalment stays invested, and N is the total number of months.
This is the same result as the closed form many banks publish: M = R × ((1 + i)n − 1) ÷ (1 − (1 + i)−1/3), where i is the quarterly rate and n the number of quarters.
Worked example
₹5,000 a month for 5 years at 6.7%:
- Quarterly rate = 6.7 ÷ 400 = 0.01675
- 60 instalments, the first invested for 60 months and the last for 1 month
- Maturity = about ₹3,56,829 on ₹3,00,000 deposited, so interest is about ₹56,829
As a check, the same method gives ₹7,136 for ₹100 a month over 5 years at 6.7%, which matches the maturity value India Post publishes for its 5-year RD at that rate.
Bank RD vs post office RD
Bank RDs come in terms from 6 months to 10 years and the rate depends on the bank and tenure. The post office RD has a fixed 5-year term and its rate is set by the Government every quarter. Both are low risk. Missed instalments attract a small penalty and too many missed months can lead to closure, so set up an auto-debit.
RD or SIP?
An RD gives a known amount at maturity. A SIP in an equity fund can earn more over long periods but the value moves with the market. Many people use an RD for goals one to three years away and SIPs for goals further out. RD interest is taxable at your slab rate, like FD interest.
Results are estimates for planning. Your bank, fund house or the tax department may round differently or apply extra charges, so check the final figure with them.