How recurring deposit maturity is calculated
A recurring deposit takes a fixed amount every month and pays a fixed rate on it. Each instalment starts earning from the month it is deposited, so the first instalment compounds for the full term while the last earns for barely a month.
The maturity amount is the sum of all those individually compounded instalments. An RD suits anyone who wants FD-like predictability but does not have a lumpsum to lock away up front.
Worked example
5,000 deposited every month for 5 years at 7% annual interest — 60 instalments in total.
| Input | Value |
|---|
| Monthly deposit (P) | 5,000 |
| Annual rate | 7% |
| Term | 5 years (60 instalments) |
| Total deposited | 3,00,000 |
| Maturity amount | 3,60,053 |
| Interest earned | 60,053 |
Note that many banks compound RDs quarterly rather than monthly, which shifts the maturity figure slightly. Treat this as a close estimate and confirm the exact amount with your bank's own schedule.
How to use this calculator
- Enter the monthly deposit you can sustain for the full term — missing instalments usually carries a penalty.
- Enter the bank's quoted annual rate for that term.
- Set the term in years or months.
- Compare the total deposited against the maturity amount to see the interest contribution.
- Compare against an FD of the same total value, which will usually mature higher.
Frequently asked questions
How does an RD differ from an FD?
An FD locks one lumpsum at the start; an RD builds the balance monthly. Because an FD has its full principal working from day one, an FD of the same total amount matures higher than an RD at the same rate.
What if I miss a monthly instalment?
Most banks charge a small penalty per missed instalment and may reduce the maturity amount accordingly. Repeated defaults can lead to the account being closed prematurely at a lower rate.
Is RD interest taxable?
Generally yes — it is usually treated the same way as FD interest and taxed as income, with tax possibly deducted at source above a threshold. Confirm the current rules for your jurisdiction.
Can I withdraw an RD before maturity?
Usually yes, with a penalty and a reduced interest rate for the period completed. Some banks also allow a loan against the RD balance, which avoids breaking it.
Is an RD better than a SIP?
They serve different goals. An RD gives a predictable, guaranteed maturity amount with no market risk. A SIP is market-linked — higher potential returns over long periods, but with real risk of loss over short ones.
This calculator is an educational tool. Results are estimates based on the inputs you provide and do not constitute financial advice. Verify figures with your bank, broker or a qualified advisor before acting on them.