RD Calculator

Complete Guide to Recurring Deposits (RD) in India — 2026

A Recurring Deposit (RD) is one of the most popular savings instruments in India, offered by banks and the Post Office. It is ideal for salaried individuals who want to invest a fixed amount every month and earn guaranteed interest — without needing a large lumpsum upfront.

What is an RD and How Does It Work?

An RD account requires you to deposit a fixed monthly amount (as low as ₹100) for a fixed tenure ranging from 6 months to 10 years. At the end of the tenure, you receive the total maturity amount — your deposits plus interest earned. The interest in Indian RDs is compounded quarterly, which means interest is added to your principal every three months, accelerating growth.

RD Interest Calculation Formula (Quarterly Compounding)

Indian banks use this formula for RD maturity calculation:

Where R = monthly deposit, r = annual interest rate, and each deposit earns compound interest for its remaining quarters. For example, ₹5,000/month at 7.0% for 36 months:

• Month 1 deposit earns interest for 12 quarters (36 months)
• Month 2 deposit earns interest for 11.67 quarters
• Month 36 deposit earns interest for 0.33 quarters
• Total Maturity = ₹2,00,819

RD vs FD — Which Is Better for You?

RD vs SIP — Which Builds More Wealth?

For the same monthly amount, SIP in equity mutual funds has historically delivered significantly higher returns over long periods. However, SIP carries market risk — your actual returns depend on market conditions. RD gives guaranteed returns at a fixed rate.

The verdict: For goals under 3 years, choose RD or FD for capital safety. For goals of 5+ years with growth objective, SIP in diversified equity funds typically outperforms RDs by 2x–3x.

Post Office RD — Government Guarantee at 6.70%

Post Office RD (National Savings Recurring Deposit Account) is one of the safest investment options in India:

• Current rate: 6.70% p.a. compounded quarterly (Q4 FY 2025-26)
• Tenure: Fixed 5 years only
• Minimum deposit: ₹100/month (multiples of ₹10)
• Max limit: No upper limit
• Backed by: Government of India (sovereign guarantee)
• Premature closure: Allowed after 3 years with penalty
• No TDS: Post Office does not deduct TDS on RD interest

Senior Citizen RD — Extra 0.50% Benefit

All major banks offer senior citizens (age 60 and above) an additional 0.50% interest rate over regular RD rates. So if the regular rate is 7.00%, senior citizens earn 7.50% p.a. The Post Office RD, however, does not offer this differential. Senior citizens should also note that the TDS threshold is higher at ₹50,000 per year (vs ₹40,000 for regular investors).

TDS on RD — How to Save On Tax

Banks deduct TDS on RD interest if your total interest from all accounts at the same bank exceeds the threshold in a financial year:

• Regular investors: TDS threshold ₹40,000/year
• Senior citizens: TDS threshold ₹50,000/year
• TDS rate with PAN: 10%
• TDS rate without PAN: 20%

How to avoid TDS: Submit Form 15G (investors below 60 years) or Form 15H (senior citizens) at the beginning of each financial year if your total income is below the taxable limit. This stops TDS deduction. Note: even if TDS is deducted, you can claim a refund if your total tax liability is lower.

What is Step-Up RD? (A Unique Strategy)

A Step-Up RD allows you to increase your monthly deposit amount by a fixed percentage every year — similar to a Step-Up SIP. This is an excellent strategy for salaried professionals whose income grows annually.

Example: Start with ₹5,000/month with 10% annual step-up for 5 years:

• Year 1: ₹5,000/month (₹60,000/year)
• Year 2: ₹5,500/month (₹66,000/year)
• Year 3: ₹6,050/month (₹72,600/year)
• Year 4: ₹6,655/month (₹79,860/year)
• Year 5: ₹7,321/month (₹87,846/year)
• Total deposited: ₹3,66,306 | Extra corpus vs flat RD: ~₹30,000+

RD Premature Withdrawal — Penalty Rules

Most banks allow premature closure of RD after 3 months from opening:

• Penalty: 1%–2% reduction in the applicable interest rate
• Interest is paid at the rate applicable for the actual period held, minus the penalty
• Post Office RD: Premature closure allowed only after 3 years
• Missing 6 consecutive installments can lead to automatic RD closure

Pro tip: Instead of premature withdrawal, apply for a Loan Against RD — you get up to 80–90% of your RD balance as a loan at the RD rate + 1–2%, while your RD continues to earn full interest.

Loan Against RD — A Smart Alternative

If you face a financial emergency while your RD is active, avoid breaking the RD. Instead, take a loan against your RD:

• Loan limit: Up to 80%–90% of RD balance
• Interest rate: RD interest rate + 1%–2%
• Tenure: Until RD maturity date
• Net cost: Often cheaper than personal loans (12%–18%)

Your RD continues earning interest while you access funds — making the net effective cost of borrowing very low.

Bank-wise RD Interest Rates — March 2026

Rates as of March 2026. Use the interactive rate table in the calculator above to apply rates directly.

Tips to Maximise RD Returns

1. Choose higher-rate small finance banks: ESAF, Ujjivan, Equitas often offer 8%–9% on RDs (subject to DICGC insurance limit of ₹5 Lakhs).
2. Use Step-Up RD: Systematically increasing deposits grow your corpus faster as your income rises.
3. Submit Form 15G/15H: Prevent unnecessary TDS deduction and maintain full compounding.
4. Open RD at month-end: First deposit starts compounding immediately — don't delay opening.
5. Set auto-debit: Never miss an installment — missed payments attract penalty and reduce maturity.

Common RD Mistakes to Avoid

• Breaking RD prematurely: Penalty reduces effective return significantly. Use loan against RD instead.
• Not submitting Form 15G/15H: Unnecessary TDS deductions reduce your net returns.
• Ignoring small finance banks: They offer 1%–2% higher rates — the difference compounded over 3–5 years is significant.
• Choosing RD for long-term goals (10+ years): SIP in equity funds historically delivers far superior wealth creation for long horizons.

Disclaimer: This RD Calculator is an educational tool. Interest rates shown are indicative and subject to change. Actual returns may vary. Verify current rates with your bank before investing. Consult a SEBI-registered financial advisor for personalised investment advice.

Last updated: March 2026