# RD Calculator – Interest and Maturity Calculation

Use RD Calculator to estimate interest and maturity you would earn through a recurring deposit offered by Banks and Post Office. Recurring deposit interest rates are ranged in between 3.50% -7.50% p.a. with investment tenure starting from 6 months to 10 years. RD interest earned are taxable and that most banks levy up to 2% on premature withdrawal of RDs.

## What is a Recurring Deposit?

Recurring Deposits (RD) are a savings option that helps you to save for the future. With an RD saving account, people can save a small amount regularly with monthly deposits for a predetermined period and earn interest on those deposits.
Once the RD deposit matures, the lump sum and interest are paid back. Determining the amount one can earn through investing in an RD is easy as the interest rate remains the same throughout the tenure of the RD. It doesn’t change, unlike some investment products, making it an attractive savings scheme.

The interest rate on RD varies from bank to bank, as with any other saving account. In Indian banks, the interest rate lies in the range of 3.5-7.5% for different time periods. The interest rate for senior citizens RD accounts is slightly higher than the regular accounts. Most banks offer an additional rate of 0.25%-0.75% for senior citizens. The interest of recurring deposits is compounded quarterly. Following are the Financial Quarters for Recurring Deposit:

• Quarter 1: April to June
• Quarter 2: July to September
• Quarter 3: October to December
• Quarter 4: January to March

Any individual, HUF, corporate, company, NRI, government organization, minor above age of 10, and minor below age of 10 under a legal guardian can open an RD account. Most banks also offer a flexi recurring deposit account. In this, the investor can invest a flexible sum of money in each interval depending on his/her convenience.

## How to Use Scripbox Recurring Deposit Calculator?

Using a RD calculator can make your calculations effortless. Using it is very easy, and the results are very accurate. Investors can save much time using it for calculating maturity amounts from RDs and can also use this to compare multiple RDs. Thus, by utilizing the RD calculator, an investor can plan his/her finances with clarity as they will know the exact maturity value from the investment in RD.

Investors need to follow the following steps to use the RD maturity calculator.

1. Enter the monthly deposit amount the investors wish to invest.
2. Next is to enter the term of investment in years. Use the slider to enter the tenure.
3. The last step involves entering the interest rate of the RD. Use the slider to enter the interest.

The RD maturity calculator now returns the initial investment, wealth gained, and total corpus created both in numeric and graphical formats. The total investment is the sum of all monthly investments by the investor in 3 years. The wealth gained is the return the investor earned during the tenure. The maturity amount value of the recurring deposit is the amount that the investor receives in the bank account at the end of the RD tenure. On the graph, the value of the investment is on Y-Axis, and the tenure is on X-Axis. The blue line indicates the investment, and the green line represents the final value. Furthermore, investors can estimate the potential returns from multiple RDs within seconds using the RD calculator.

## Advantages of Using an Online Recurring Deposits Calculator

The following are the advantages of using Scripbox’s online RD calculator:

• Easy to use: RD calculator is very easy to use. All one has to do is insert values of the monthly deposit, the RD rate, and the number of years of investing. The RD calculator computes the maturity amount accurately.
• Time-saving: Using an RD calculator can save an investor’s valuable time. It performs complex calculations in a matter of seconds. It eliminates the trouble the investor has to go through due to manual calculations.
• Accuracy: The calculator is very accurate, and also there is no chance of error if you provide the correct inputs.
• Future Planning: The calculator enables investors to plan their future with excellent precision as the calculator returns the exact value their investment will reap.
• Comparison: Banks and financial institutions offer RDs. Using an RD calculator, investors can compare the maturity values of multiple RDs in a matter of seconds.
• Free to use: The RD calculator is free to use, and the investor can also use it multiple times to calculate the returns from RDs in different tenures and interest rates.

## How to Calculate RD Interest and Maturity Amount?

To make an investment decision, it is essential to get an estimate the potential returns from it. Thus, the RD interest calculator will help an investor estimate the potential returns.

Interest in RD is compounded quarterly. Until then, it is calculated as simple interest. For example, when an investor starts their RD in the month of February, the amount will earn only simple interest until the month of March. Only after the first quarter, the interest starts compounding. To calculate the maturity value of an RD, you can use the following formula:

RD Maturity Amount = R[(1+i) (n-1)]/1-(1+i)(-1/3))

• R = Monthly Instalment. This is the amount that you invest in the RD account every month. The minimum deposit amount varies for every bank and can be as low as Rs 10.
• N = number of quarters (tenure). It is the duration for which you hold the money in the RD account. Generally, RD tenure varies between 6 months to 10 years.
• i = Rate of interest/400. The amount of interest earned depends on the deposit amount in the RD account, the applicable interest rate by the bank, and the tenure of RD.

Let’s take the example of Arun, who is planning to invest INR 5,000 every month at 8% interest p.a. for 24 months or eight quarters. When we insert these values in the formula, we get,

M=5,000[(1+8/400) (8-1)]/1-(1+8/400)(-1/3))

M=INR 1,26,369

The maturity value for Arun on his investment in RD is INR 1,26,369.

The calculation might look simple but is not. Hence one can use an RD interest calculator to save time and get accurate results.

## Differences Between RD and FD

Comparing RDs with Fixed Deposits (FDs) is fair as they both are considered risk free investment options available for investors. The following are the key differences between recurring deposit and fixed deposit:

1. The primary difference between RD and FD is the style of investment. In an RD, investors make regular monthly instalments for the entire investment tenure. In an FD, a fixed amount is invested at the start of the tenure.
2. An FD can earn more money than an RD, and the difference will only increase with the increase in the tenure. This is because, in an FD, you invest a lumpsum amount for the entire term and hence earn more interest. In an RD, the deposit is made monthly. And thus earn less interest.
3. Investors who want to save small portions of their income regularly can invest in Recurrent Deposits. Investors with a lumpsum amount can invest in Fixed Deposits.

What are Recurring Deposits (RD), and how do they work?

Recurring Deposit (RDs) is an investment instrument that requires regular monthly fixed deposits for a pre-determined period and earns an interest rate. Once an RD matures, a lumpsum amount plus interest paid back to the investor. They are similar to fixed deposits but with regular investing

Where I can open a Recurring Deposit Account?

You can open a recurring deposit account in almost all banks such as Axis bank, HDFC bank, SBI bank, Canara Bank, Karur Vysya Bank, ICICI bank etc. so to start a recurrent deposit investment. You just need to go to the bank where you have your current account and ask about the banks recurring deposit options to open an RD account. Depending on the bank there might also be the option to do this via internet banking.

Can tax be saved on recurring deposits?

Yes. There are tax savings RDs. However, the duration for tax savings RD is medium to long term.

Is interest earned on recurring deposit taxable?

Yes, the interest income from a recurring deposit is taxable.

Is Tax Deduction at Source (TDS) applicable on the interest earned on Recurring Deposits?

Yes, TDS of 10% is applicable on the interest income. Also, only if the interest income on the recurring deposits exceeds Rs.10,000, the bank deducts TDS.

What is the minimum tenure for Recurring Deposit?

The minimum tenure for Recurring Deposit differs from bank to bank. For a minimum tenure of 6 months or 12 months, most banks offer RD schemes.

What is the minimum amount that can be deposited into a RD account?

Minimum Deposit amount varies for every bank and it can be as low as Rs.10.

Are there any extra benefits for senior citizens on Recurring deposit?

Yes, banks generally offer a slightly higher interest rate than normal deposits. Usually, banks offer 0.25 percent to 0.75 percent more interest than normal RDs.

Can I redeem my Recurring Deposit before the original term?

Yes, you can withdraw your Recurring Deposit before the term is over. However, you have to bare the penalty that comes with premature withdrawals.

Can I add nominees in my Recurring Deposit account?

How to withdraw the principal amount deposited before its maturity in a recurring deposit account?

A depositor should submit a request to the bank requesting the recurring deposit account’s premature withdrawal. Banks allow premature withdrawals, and however, these attract penalties. Furthermore, you will earn interest only for the tenure for which you hold the money in the RD account.

What happens if I delay the monthly deposit payment?

A delay of even one day in your instalment payment, will either have an interest penalty or a cash penalty. Either ways, there will be an affect on your maturity amount. If you have more than 6 outstanding instalments, some banks reserve the right to close the RD account.

Can I make partial withdrawals from my RD account?

No. You cannot make partial withdrawals from RD. Also, you cannot opt for periodic pay-outs of just the interest component.

What documents are required for opening a Recurring Deposit (RD)account?

Following are the documents required for opening an RD account: Bank application form, Passport size photographs, Identity proof, Address proof and KYC documents if the bank requests for it.