What is a Recurring Deposit?

A recurring deposit locks in a fixed monthly deposit, for a fixed tenure, at a fixed interest rate. Think of it as the guaranteed-return cousin of a SIP. Banks currently pay roughly 6% to 7% on RDs, with senior citizens getting about 0.5% extra, and the post office 5-year RD pays 6.7% for Q2 FY 2026-27 (July to September 2026), compounded quarterly.

How is RD Maturity Calculated?

Each monthly instalment earns interest from its own deposit date until maturity, with quarterly compounding. Your first instalment earns for the full tenure, while your last one earns for barely a month or two. For example, ₹5,000 a month for 5 years at 6.7% matures at roughly ₹3.56 lakh from ₹3 lakh deposited. The same total invested up front in a fixed deposit would mature higher, simply because every rupee earns for the whole term.

What RDs are Best At

RDs are purpose-built for known bills on known dates: school fees due next June, an insurance premium, a planned trip, festival spending. Match the tenure to the bill and the outcome is exact, with no market risk and no timing decisions. A pattern many households use is one RD per recurring annual expense, each maturing a month before its bill falls due. It quietly converts lumpy annual costs into a flat monthly outflow.

Practical Points to Know

RD interest is fully taxable at your slab, and banks deduct TDS once your interest crosses ₹50,000 a year, or ₹1 lakh for seniors. Missing an instalment attracts a small penalty; the post office charges ₹1 per ₹100 per delayed month. If you need money early, premature closure is allowed with a rate cut, and loans against the RD balance are usually a better option — the full RD playbook covers these rules bank by bank.

RD, FD, SIP or Savings Account?

Against an FD, the difference is cash flow: an FD needs the money up front, while an RD builds it monthly at similar rates. Against a SIP, the trade-off is certainty versus growth: for goals under about 3 years the RD's guaranteed outcome usually wins, while beyond 5 years equity SIPs have historically come out ahead. Against leaving money in a savings account, there is no contest: roughly 6.5% versus 2.5% to 3%. Automating an RD debit the day after your salary arrives is the simplest saving upgrade available.

FAQs about RD Calculator

The post office 5-year RD pays 6.7% (Q2 FY 2026-27, July–September 2026), compounded quarterly. Bank RD rates vary by bank and tenure, mostly between 6% and 7% as of July 2026, with ~0.5% extra for senior citizens.
Each instalment compounds quarterly from its own date to maturity. The calculator sums all instalments' growth — deposits made earlier earn more, which is why the maturity is less than a lumpsum FD of the same total.
Yes, fully taxable at your slab rate, with TDS deducted by banks when annual interest exceeds ₹50,000 (₹1 lakh for senior citizens). Submit Form 15G/15H if your income is below taxable limits.
RDs guarantee the outcome; SIPs in equity funds have historically returned more over long periods but fluctuate. A common approach: RDs for short-term, must-hit goals (1–3 years), SIPs for goals five years and beyond.
Yes — most banks and the post office lend against the RD balance (typically up to 50% at the post office, more at banks) at a small premium over the RD rate, which beats breaking the deposit and losing accumulated interest.
Match it to the goal date: RDs run from 6 months to 10 years. Longer tenures lock today's rate for the entire period — attractive when rates are falling, less so when they are rising. For undated goals, 1-year rolling RDs keep flexibility.