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How to use the rd calculator
- 1Enter the amount you will deposit every month.
- 2Enter the interest rate — banks quote the same rates for RD as for FDs of matching tenure.
- 3Set the tenure in months; 12 to 120 covers what banks offer.
- 4Read the total deposited, interest earned and maturity value.
Why RD interest looks smaller than FD interest at the same rate
People regularly compare an RD's interest against an FD of the same total and feel short-changed. The explanation is arithmetic, not fine print: in an FD the entire amount earns interest for the full tenure, while in an RD only the first installment does. The last installment earns interest for a single month. ₹5,000 a month for a year at 8% produces about ₹2,647 of interest on ₹60,000 deposited — the average rupee was only invested for six and a half months.
Each installment is effectively its own small fixed deposit, compounded quarterly for the months it remains — which is exactly how this calculator computes the total, installment by installment, rather than using a shortcut formula.
The comparison that actually matters is not RD versus FD — if you had the lump sum, the FD wins trivially — but RD versus not saving at all. The RD's real feature is the standing instruction: the deposit happens before you can spend it.
Bank RDs and the post office variant
Bank RDs run from six months to ten years with rates matching their FD ladder, and the same senior-citizen bump. The post office RD is a five-year product with its rate set by the government each quarter, compounding quarterly like the banks — enter the notified rate above and the calculation carries over unchanged.
Missed installments are the RD's weak point: banks charge small penalties and the post office has a revival procedure, and chronic gaps can close the account. If your income is irregular, a fistful of small FDs bought whenever cash allows can be a better fit than one rigid RD.
Tax works exactly as for FDs: the interest is income at your slab rate, TDS applies past the threshold, and no 80C deduction attaches to RD deposits — a common confusion with five-year tax-saver FDs, which are a different product.
Using an RD deliberately
The RD is a commitment device for a dated goal: school fees next June, insurance premium in March, a trip in fourteen months. Set the tenure to end just before the money is needed, and the product's rigidity becomes its point.
For goals beyond three or four years, compare the same monthly amount in the SIP Calculator linked below. The RD's certainty costs you the equity premium; over long horizons that cost compounds into a large number, and seeing both projections side by side makes the trade explicit.
A detail worth checking with your bank: RD tenure and rate lock at opening. Opening a ten-year RD in a high-rate environment locks that rate for the decade — one of the few ways a small saver can do what bond investors call locking in yield.
Frequently asked questions
How is RD interest calculated?
The bank method: each monthly installment earns quarterly-compounded interest for the months it remains deposited. The first installment compounds the longest, the last for one month, and the maturity value is the sum — which is what this calculator computes, installment by installment.
Why is my RD interest so much less than an FD's?
Because the money arrives gradually. The average rupee in a one-year RD is invested for about six and a half months, roughly half an FD's exposure — so interest is roughly half. The rate is the same; the time in the deposit is not.
Does an RD save tax?
No — RD deposits carry no 80C benefit, and the interest is fully taxable at your slab. The five-year tax-saver FD is the deposit product with an 80C deduction; it is a separate thing.
What if I miss a monthly installment?
Banks levy a small penalty per missed month and may close chronically defaulted accounts; post office RDs have a revival window with a fee. The projection above assumes every installment lands on time.
Is anything I type sent to a server?
No — the computation is a loop in your browser. Deposits, rates and results never leave the page.