RD Calculator
Calculate returns on your recurring deposit investments
About Recurring Deposit
Recurring Deposit (RD) is a popular savings scheme offered by banks and financial institutions that allows you to invest a fixed amount monthly for a predetermined period and earn interest on your deposits.
Benefits:
- Disciplined monthly savings
- Guaranteed returns
- Low risk investment
- Flexible tenure options
- Loan facility available
Frequently Asked Questions
What is a Recurring Deposit (RD)?
A Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount of money every month for a predetermined period. The bank pays you interest on these deposits, which is compounded quarterly, and you receive the maturity amount at the end of the tenure.
How does an RD calculator work?
An RD calculator uses the compound interest formula to calculate the maturity amount of your recurring deposit. It considers your monthly deposit amount, interest rate, and tenure to compute the total investment, interest earned, and final maturity amount.
What is the minimum tenure for RD?
The minimum tenure for a recurring deposit is typically 6 months, and it can extend up to 10 years (120 months) depending on the bank or financial institution's policies.
How is RD interest calculated?
RD interest is calculated on a quarterly compounding basis. Each monthly deposit earns interest for a different period - the first deposit earns interest for the entire tenure, while the last deposit earns interest for only one month. The formula used is: M = R[(1+i)^n-1]/(1-(1+i)^(-1/3)), where M is maturity amount, R is monthly deposit, i is monthly interest rate, and n is number of quarters.
Is RD better than FD?
Both RD and FD have their advantages. RD is better for those who want to save regularly with smaller amounts, while FD is suitable for those who have a lump sum to invest. RD helps build a savings habit, while FD may offer slightly higher interest rates for the same tenure.
Can I withdraw RD before maturity?
Yes, you can withdraw your RD before maturity, but you may have to pay a penalty and you might receive lower interest rates. The exact terms depend on your bank's policies. Some banks may charge a premature withdrawal penalty of 1% on the interest rate.
What happens if I miss an RD installment?
If you miss an RD installment, banks typically charge a penalty fee. Some banks may allow you to make up for missed installments, while others may discontinue the RD account if multiple installments are missed. It's important to check your bank's specific policies regarding missed payments.
Is RD interest taxable?
Yes, the interest earned on recurring deposits is taxable as per your income tax slab. Banks deduct TDS (Tax Deducted at Source) if the interest income exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). You need to declare RD interest income while filing your tax returns.