Recurring Deposit (RD) Calculator

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What is Recurring Deposit?

A recurring deposit is a type of term deposit offered by banks / financial institutes which assist people with regular incomes to deposit a fixed amount every month into their RD account and earn interest at the rate applicable.

Recurring deposit (RD) allows customers an opportunity to build their savings via regular monthly deposits of a fixed sum over a fixed period of time.

Recurring deposit matures on a specific date in the future along with all the deposits made every month

It is similar to a fixed deposit of a certain amount in month-to-month installments.

The minimum tenure of this deposit is six months and maximum is ten years.

How is interest on RD calculated?

Compound interest is added to recurring deposit at the end of every financial quarter.

Rate of interest of 5% to 7.25% is offered on RD by various financial institutions.

RD calculation formula:

M =R[{(1+i)^n} – 1] ÷ 1-{(1+i)^(-1/3)}

M = Maturity value of the RD

R = Monthly RD installment to be paid

n = Number of months (tenure)

i = Rate of Interest / 400

Let’s consider an example to understand this better,

You invest a principal amount of 500 for a period of 60 months at an interest rate of 6% and it is compounded quarterly.

M =R[{(1+i)^(n/3)} – 1] ÷ 1-{(1+i)^(-1/3)}

M =500[{(1+(6/400))^(60/3)} – 1] ÷ 1-{(1+(6/400))^(-1/3)}

M =500[{(1+(0.015))^(20)} – 1] ÷ 1-{(1+0.015)^(-1/3)}

M =500[{(1.015)^(20)} – 1] ÷ 1-{(1+0.015)^(-1/3)}

M= 35,031.78

Maturity amount in this case at the end of 30 months will be 35,031.78.

Interest paid by banks in India (2020):

Banks / Financial companies	Normal Interest Rates		Senior Citizen Interest
Banks / Financial companies	less than 5 Years	More than 5 Years	less than 5 Years	More than 5 Years
State Bank of India	5.30%	5.80%	5.40%	6.20%
AXIS Bank	5.50%	6.00%	5.50%	6.00%
ICICI Bank	5.35%	5.85%	5.50%	6.30%
HDFC Bank	5.35%	5.85%	5.50%	6.00%
Union Bank of India	5.45%	5.95%	5.45%	5.95%
IDBI Bank	5.30%	5.90%	5.30%	5.90%
Kotak Mahindra Bank	4.90%	4.50%	5.40%	5.00%
Yes Bank	7.00%	6.75%	7.75%	7.25%
Federal Bank	5.35%	5.50%	5.85%	6.00%
IndusInd Bank	6.75%	6.65%	7.25%	7.15%
Punjab National Bank	5.30%	5.30%	6.05%	6.05%
Bank of Baroda	5.30%	5.30%	5.80%	6.30%
Bank of Maharashtra	5.00%	5.00%	5.50%	5.50%
Indian Overseas Bank	5.45%	5.45%	5.95%	5.95%
IDFC Bank	6.75%	6.25%	7.25%	6.75%

Note: Please refer to the respective bank websites and confirm the interest rates before investing. The above chart is updated in August 2020.

Benefits of Recurring Deposit:

High Interest rates.

Useful for short term goals.

A Flexible amount can be invested.

Loan on Recurring deposit

Penalty on early withdrawal:

Penalty / Charges vary from bank to bank. However, it is observed that maximum of 2% of agreed upon interest rate is charged on premature withdrawing.