A recurring deposit lets you invest a fixed sum every month for a chosen tenure and earn interest similar to fixed deposits.
A recurring deposit (RD) is a fixed-term investment you make monthly (unlike a lump-sum investment in an FD). An RD allows you to invest regularly and earn interest. RDs help individuals build a regular investment habit. Most banks and financial institutions offer the recurring deposit facility. Some private limited companies also offer RD investment options that may offer higher returns, but authorized banks and financial institutions are generally safer. RD return calculations can be complicated to do manually; RD calculators help by showing the amount you will receive at maturity.
An RD calculator provides estimated returns and helps investors determine the amount they will receive at maturity. Investors just need to enter the monthly investment amount, the bank’s interest rate for the selected RD plan, and the RD tenure; the calculator then shows the estimated amount they will receive at maturity. It’s important to check the RD returns after maturity, and doing it manually is complicated. Analyzing the returns can be challenging. Investors also need to check the current Income Tax rules on TDS deduction liability for RDs.
The RD maturity amount depends on three variables. An RD calculator applies these variables to a standard formula to get the accurate maturity amount.
The formula for RD maturity is given below:
Maturity is the sum of each monthly installment grown until the end of the tenure: M = Σ P × (1 + r/400)(N - k + 1)/3, for k = 1 to N.
P is the monthly deposit, r is the annual percentage rate, and N is the number of monthly installments. The estimate uses quarterly compounding with fractional quarters for each installment.
The formula for RD interest is given below:
Estimated interest earned = maturity amount − (monthly deposit × number of months). Actual bank calculations and rounding can differ.
Follow this process to use the RD calculator online as shown below:
Actual return can vary due to the impact of leap year and taxation changes (if any).
CredBuddha’s RD Calculator makes calculations easier and gives you the final amount within seconds. Also, there are a few more advantages of using an RD calculator online, and they are as follows:
Interest rates vary by bank and tenure. Check your bank’s current published rate before using this estimate.
Anyone can open an account for RD investment online or offline. To apply online, investors can visit the official provider website and apply for a recurring deposit.
To open an RD account offline, the investor can visit the nearest branch with the required details and open the account.
Here are some basic details that the investor will require for opening an account:
The documents list can vary as per the providers. You can check the official portals for the accurate document list.
Fixed deposit (FD) and Recurring deposit (RD) are both safe investment options. Banks almost always provide the same interest rate for both types of term investments. Along with the same interest rates, there are some major differences as well, and those are shown below in the table:
| Parameter | Fixed Deposit (FD) | Recurring Deposit (RD) |
|---|---|---|
| Payment | Complete amount paid at one time | Deposit amount paid in monthly installments |
| Maximum deposit | No limit on maximum deposit amount (may vary for different banks) | Max. deposit amount capped at Rs. 15 lakh (may vary for some banks) |
| Tenure | Deposit tenure ranges from 7 days to 10 years | Deposit tenure ranges from 6 months to 10 years |
| Interest | Interest is earned on the entire amount, thus earning slightly higher returns as compared to RD | Interest is earned on monthly installments, thus lowering the returns to be earned |
| Suitable for | Salaried individuals and pensioners, etc. | Homemakers, students, and freelancers, etc. |
Explore our other calculators.
A recurring deposit lets you invest a fixed sum every month for a chosen tenure and earn interest similar to fixed deposits.
Most banks compound RD interest quarterly. CredBuddha’s calculator uses the standard quarterly RD maturity formula for estimation.
Banks may charge a penalty for missed installments. Check your bank’s RD terms before opening an account.
Interest income may be subject to TDS under Income Tax rules. The calculator shows gross maturity before tax.