RD — Frequently Asked Questions
How is RD interest calculated?+
RD uses quarterly compounding per RBI guidelines. Each monthly installment earns interest from the month of deposit to maturity. The formula: M = R × [(1+r)^n - 1] / (1-(1+r)^(-1/3)), where R = monthly deposit, r = quarterly rate, n = quarters. Our calculator applies this correctly.
Is RD interest taxable?+
Yes. RD interest is fully taxable as "Income from Other Sources" at your slab rate. TDS @ 10% is deducted if annual interest from all bank deposits exceeds ₹40,000 (₹50,000 for seniors). Submit Form 15G/H if income is below the taxable limit to avoid TDS.
RD vs FD vs SIP — which is better?+
RD is ideal when you have monthly cash flows (like salary) and want guaranteed returns. FD is better for lump sum investment. SIP in mutual funds (ELSS or balanced funds) historically gives 10–15% returns but comes with market risk. For goals under 3 years: RD/FD. For goals over 5 years: SIP typically wins.
What happens if I miss an RD installment?+
Most banks charge a small penalty (typically ₹1–₹15 per ₹100 of the missed installment per month, varying by bank) for late RD payments. If you miss installments for a stretch of months (usually 4–6 consecutive months depending on the bank), the account may be closed automatically and the balance paid out at the applicable savings account rate. Post Office RDs allow you to regularize a missed installment by paying it later along with a default fee, as long as it's within the account tenure.
Can I withdraw or close my RD before maturity?+
Yes, but with conditions. Most banks allow premature withdrawal after the RD has run for at least 3 months, though you'll typically forfeit 0.5%–1% of the contracted interest rate as a penalty. Partial withdrawal isn't usually allowed on an RD (unlike a savings account) — it's an all-or-nothing closure. Post Office RDs also allow a loan of up to 50% of the balance after one year, which can be a better option than closing the account early if you need funds temporarily.
What is the minimum and maximum RD tenure?+
RD tenure typically ranges from 6 months to 10 years, in multiples of 3 months for most banks (Post Office RDs are fixed at 5 years, extendable in blocks of 4 years after maturity). Minimum monthly deposit is usually ₹100–₹1,000 depending on the bank, with no upper limit for regular accounts. Choose a tenure that matches your goal — under 3 years for short-term needs (a trip, gadget, emergency buffer), 3–5 years for medium-term goals where you want guaranteed, risk-free growth.
RD Calculator India 2026 — How Recurring Deposits Work
A Recurring Deposit (RD) lets you invest a fixed amount every month and earn interest at rates similar to a fixed deposit, making it one of the most disciplined ways to build savings from a regular income. Unlike a Systematic Investment Plan (SIP) in mutual funds, RD returns are guaranteed and unaffected by market movements — you know exactly what you'll get at maturity the day you open the account.
Worked Example: ₹10,000/Month RD at 7.1% for 5 Years
If you deposit ₹10,000 every month in an RD earning 7.1% per annum (compounded quarterly, the RBI-mandated method for all RDs) for 5 years, you'll have deposited a total of ₹6,00,000. Because each installment earns interest for a different length of time — the first month's deposit earns interest for the full 60 months, while the last month's deposit earns interest for barely any time at all — the total interest works out to roughly ₹1.17 lakh, taking your maturity value to around ₹7.17 lakh. Change any input in the calculator above to see this recalculated instantly for your own numbers.
Current RD Interest Rates — Compare Banks (2026)
| Bank / Institution | General Rate | Senior Citizen Rate |
|---|
| State Bank of India (SBI) | 6.50% | 7.00% |
| HDFC Bank | 7.10% | 7.60% |
| Post Office RD (5-yr) | 6.70% | 6.70% |
| ICICI Bank | 6.90% | 7.40% |
Rates change with RBI's repo rate cycle and each bank's own liquidity needs, so always verify the current rate on the bank's website before opening an account — this table is a general reference, not a live feed.
Why RD Suits Salaried Savers
RD is purpose-built for people with a predictable monthly income — you're not required to find a lump sum, and the fixed monthly commitment builds savings discipline the way a lump-sum FD can't. Because the deposit and rate are locked in from day one, RD is a good fit for short-to-medium-term goals (an emergency fund, a wedding, a down payment) where you can't afford market risk but still want a better return than a savings account.