RD maturity formula
Each monthly instalment earns interest from the month it's paid until maturity, compounded quarterly. Banks in India use this formula:
M = R × [(1 + i)^n − 1] ÷ [1 − (1 + i)^(−1/3)]
R = monthly deposit, i = rate ÷ 400 (the quarterly rate), n = number of quarters. The calculator adds up each instalment separately, which gives the same result for any number of months.
Example: ₹5,000 a month at 7% for 12 months: i = 0.0175, n = 4 → M = ₹62,311. You deposit ₹60,000 and earn ₹2,311.
How tenure changes the result
| ₹5,000 a month at 7% | Deposited | Maturity value |
|---|---|---|
| 12 months | ₹60,000 | ₹62,311 |
| 60 months | ₹3,00,000 | ₹3,59,664 |
RD vs FD vs SIP
| RD | FD | SIP (mutual fund) | |
|---|---|---|---|
| How you pay | Fixed amount monthly | Lump sum once | Fixed amount monthly |
| Returns | Fixed, known in advance | Fixed, known in advance | Market-linked, not guaranteed |
| Tax on returns | Slab rate on interest | Slab rate on interest | Capital-gains tax on redemption |
| Use it for | Saving towards a dated goal | Parking a lump sum | Long-term growth |
Things to know
- Missed instalments usually attract a small penalty, and banks may close the RD after several misses.
- Tax: RD interest is taxed at your slab rate. Banks deduct TDS once your total interest at the bank (FD + RD) crosses ₹50,000 a year (₹1 lakh for senior citizens).
- Post office RD runs for 5 years with a government-set rate that's reviewed quarterly; check the current rate and enter it above.
To see how the same monthly amount could grow in equity funds, try the SIP calculator.
Frequently asked questions
How is RD interest calculated?
Each monthly deposit earns interest from the date it's paid until maturity, compounded quarterly. The total is M = R × [(1 + i)^n − 1] ÷ [1 − (1 + i)^(−1/3)], where i is the annual rate ÷ 400 and n the number of quarters.
What will ₹5,000 a month in an RD become?
At 7% for 12 months, about ₹62,311. Over 5 years (60 months), about ₹3,59,664 from ₹3 lakh of deposits.
Is RD better than FD?
Neither pays more in itself; the rates are usually similar. An RD suits saving from monthly income; an FD suits money you already have. For the same rate and period, a lump sum in an FD earns more because all of it is invested from day one.
Is RD interest taxable?
Yes. It's added to your income and taxed at your slab rate. TDS applies when your total interest at one bank exceeds ₹50,000 a year, or ₹1 lakh for senior citizens.
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