Recurring Deposit (RD) Calculator

A Recurring Deposit (RD) is a special kind of term deposit offered by Indian banks that allows people with regular incomes to deposit a fixed amount every month into their RD account and earn interest at the rate applicable to Fixed Deposits. It is the banking equivalent of a mutual fund SIP, but with absolute safety of capital and guaranteed returns.

How RD Interest is Mathematically Calculated

Many investors incorrectly assume that if they invest ₹10,000 a month for 12 months at a 7% interest rate, they will earn 7% on the total ₹1,20,000 deposited. This is mathematically incorrect.

In an RD, every single monthly installment is treated as a separate deposit. Your first month's ₹10,000 earns interest for the full 12 months. Your second month's deposit earns interest for 11 months. Your final deposit in the 12th month earns interest for only 1 month. Furthermore, banks in India compound RD interest quarterly.

Because of this staggered deposit timeline, the absolute return on your total invested amount in an RD will always be roughly half the stated annual interest rate (for a 1-year tenure). Our calculator simulates this exact banking logic, compounding the interest every quarter while adding your new monthly deposits, to show you your true maturity value.

RD vs Mutual Fund SIP: Which is better?

The debate between an RD and a Systematic Investment Plan (SIP) comes down to your financial goals and risk appetite.

• Choose RD when: You are saving for a short-term goal (1 to 3 years) that has a fixed deadline, such as paying your child's annual school fee, saving for a down payment on a car, or accumulating an emergency fund. In the short term, equity markets are too volatile; you cannot risk losing your capital.
• Choose SIP when: You are investing for long-term goals (5 to 20 years) like retirement or a child's higher education. Over a long horizon, equity mutual funds historically deliver 12-15% CAGR, completely crushing RD returns and aggressively beating inflation.