RD Calculator

A recurring deposit and a fixed deposit of the same total value don't pay the same interest. The difference comes down to timing, and you should understand it before deciding which one to open.

Every instalment has its own clock

Deposit 5,000 a month for three years at 7%. You pay in 1,80,000 in total and the maturity value is 2,00,686.49, so the interest is 20,686.49. That's about 11.5% of what you paid in.

The engine doesn't apply one formula to the whole pot. It treats each of the 36 instalments as a separate small deposit and compounds it quarterly for however many months are left after it's paid:

Maturity = Σ  P × (1 + r/4)^(4 × months remaining ÷ 12)

The first instalment sits for 36 months and grows by a factor of 1.2314. The last one sits for one month and grows by 1.0058, earning about 29 rupees. Averaged across the schedule, your money is invested for roughly half the term, and that's why the yield looks thin next to a fixed deposit.

The comparison people get wrong

Put the same 1,80,000 into a fixed deposit for three years at 7% and it earns 41,659.08. That's double the recurring deposit's interest, because the entire sum compounds for the full three years. It doesn't make the recurring deposit a worse product, just a different one. An RD is for money you don't have yet, so comparing it with an FD you couldn't have funded doesn't tell you much.

Compare it with the other options for the same monthly cash flow instead: another recurring deposit at a better rate, or a monthly investment plan that carries market risk and no guarantee.

Practical failure modes

• Missed instalments. Banks typically charge a penalty for each missed month and may close the account after repeated defaults. The projection assumes you never miss a payment.
• Tax deducted at source. The interest shown is gross. Recurring deposit interest is taxable as income, and tax is deducted at source once it crosses the statutory threshold.
• Early closure. If you close before maturity, the interest is generally recalculated at the rate for the period the account actually ran, less a penalty. The maturity figure assumes the account runs to term.
• Compounding convention. Quarterly compounding is standard practice at Indian banks. If your bank's terms are different, your maturity value will be too.

Choosing a tenure

A longer tenure raises the average time each rupee stays invested, so the interest share goes up. At 6.5% over five years, 5,000 a month adds up to 3,00,000 in deposits and matures at 3,54,954.10. That's interest of 54,954.10, or 18.3% of deposits, compared with 11.5% for the three-year run above. What you give up is liquidity. The money is committed, and if you pull it early you get the penalty, not the projection.

Companion calculators

For a single lump sum in the same product family, use the FD calculator. For a market-linked monthly instalment instead of a guaranteed one, use the SIP calculator. To see the effect of switching compounding frequency, the compound interest calculator lets you vary it directly.