Is RD interest compounded quarterly?

Yes, at most Indian banks recurring deposit interest is compounded every quarter.

What is the minimum RD tenure?

Usually 6 months at banks, up to 10 years. India Post's RD has a fixed 5-year term with its own government-set rate.

Is RD better than FD?

If you have a lump sum, an FD earns more because all of it earns interest from day one. An RD suits saving from monthly income.

Is RD interest taxable?

Yes, it is taxed as income at your slab rate, and TDS may apply above the threshold.

What happens if I miss an instalment?

Banks typically charge a small penalty per missed instalment, and several missed instalments can lead to the RD being closed early.

Financial · Free tool

RD Calculator

Recurring deposit maturity value for a fixed monthly saving, compounded quarterly.

A recurring deposit (RD) lets you save a fixed amount every month with a bank or post office and earn a fixed interest rate on it. It is the deposit equivalent of a SIP: no market risk, a known maturity value, and a monthly habit that builds a sum for a planned expense such as a holiday, school fees or a down payment.

The maths is slightly more involved than a fixed deposit because every instalment is invested for a different length of time. The first deposit earns interest for the full tenure; the last earns for only one month. Indian banks compound RD interest quarterly, and this calculator values each instalment separately at that rate and adds them up — the same method banks use for their maturity tables.

Enter the monthly amount, the annual rate and the tenure in months. The result shows the maturity value, the total you paid in and the interest earned, before any tax.

By DailyCalc Editorial Team · Updated 2026-10-03 · 6-min read · 3 sources cited

● RD calculator

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RD maturity formula (quarterly compounding)

M = Σ R × (1 + r ÷ 4)^(mₖ ÷ 3), k = 1 … n

Each monthly instalment R stays invested for mₖ months — n months for the first, n − 1 for the second, down to 1 month for the last. Dividing months by 3 converts them to quarters, the compounding period. Adding all n terms gives the maturity value M. The closed form often quoted by banks, M = R[(1+i)^q − 1] ÷ (1 − (1+i)^(−1/3)) with i = r/4 and q = n/3 quarters, gives the same answer.

R: Monthly instalment.
r: Annual interest rate as a decimal (7% → 0.07); r ÷ 4 is the quarterly rate.
n: Tenure in months (6–120).
mₖ: Months instalment k earns interest: n − k + 1.

Worked example: ₹5,000 a month at 7% for 2 years

A two-year RD to fund next year's school fees:

Quarterly rate = 0.07 ÷ 4 = 0.0175; tenure n = 24 months.
First instalment grows for 24 months = 8 quarters: 5,000 × 1.0175⁸ ≈ ₹5,744.
Last instalment grows for 1 month = ⅓ quarter: 5,000 × 1.0175^(1/3) ≈ ₹5,029.
Adding all 24 instalments' values gives a maturity of ₹1,29,098.90.
Paid in = 5,000 × 24 = ₹1,20,000, so interest = ₹9,098.90.

Result: ₹5,000/month at 7% for 24 months matures at ₹1,29,098.90 — ₹1,20,000 deposited + ₹9,098.90 interest.

How to use this RD calculator

Three inputs from your bank's RD terms.

Step 1: Enter the monthly deposit

The fixed amount debited each month. Most banks accept RDs from ₹100 upward in multiples of ₹10 or ₹100.

Step 2: Enter the annual rate

The RD rate for your tenure. RD rates usually match the bank's FD rate for the same period.

Step 3: Enter tenure in months

Between 6 and 120 months. Many banks require multiples of 3 months; the calculator accepts any whole number in range.

When an RD makes sense

Goals with a date and a fixed amount suit recurring deposits:

Planned expenses

Fees, a wedding, a holiday or a gadget due in one to three years — money you cannot risk in the market.

Building a saving habit

A fixed monthly debit on salary day is easier to keep than ad-hoc saving.

Five-year saving

₹5,000 a month at 7% for 60 months matures at about ₹3,59,664 on ₹3,00,000 deposited — ₹59,664 interest.

One-year sinking fund

₹10,000 a month at 6.8% for 12 months matures at about ₹1,24,487 — useful for annual insurance premiums.

RD vs SIP

Compare with our SIP calculator: an RD's return is lower but fixed; a SIP's is potentially higher but uncertain.

Pro tips

Small details that change the maturity amount:

Set the RD debit for a day or two after salary credit so instalments are never missed.
Missed instalments usually attract a small penalty and can lead to the RD being closed after repeated defaults.
Compare the RD rate with the same-tenure FD rate — if you already have the lump sum, an FD earns more because all the money is invested from day one.
RD interest is taxable like FD interest, and banks may deduct TDS; account for it in goal planning.
Bank RDs are covered by DICGC deposit insurance up to ₹5 lakh per depositor per bank.

Common mistakes

Misreadings that make RDs look better or worse than they are:

Applying the rate to the full total

₹1,20,000 paid in over 2 years does not earn 7% for 2 years — most of it is invested for much less. The interest is about ₹9,099, not ₹17,000.

Comparing with simple interest

RD interest compounds quarterly, so a simple-interest estimate understates the maturity value slightly.

Ignoring premature closure terms

Closing early usually pays a reduced rate. Choose a tenure that matches the goal date.

Assuming all banks compute identically

Rounding, the day each instalment is credited and the compounding date can shift the result by a few rupees. Check the bank's maturity table.

Sources & references

The formula, thresholds and guidance on this page were checked against these primary sources. Written and reviewed by DailyCalc Editorial Team; last updated 2026-10-03. Spotted an error? Tell us.

Disclaimer: Illustrative only — not financial advice. Banks may compute and round RD interest differently and deduct TDS. Confirm the maturity value with your bank.

FAQs

Frequently asked questions

Each monthly instalment compounds quarterly for the months it remains invested, and the values are added. ₹5,000 a month at 7% for 24 months gives ₹1,29,098.90.