Last updated: 2026-10-21
How RD maturity is calculated
Banks compound RD interest quarterly. Each monthly instalment earns interest for the time it stays in the account, so your first deposit earns the most. The standard formula is:
M = R × [(1 + i)n − 1] ÷ [1 − (1 + i)−1/3]
- R = monthly deposit
- i = quarterly rate (yearly rate ÷ 400)
- n = number of quarters
Example: ₹5,000 a month for 12 months at 7% gives about ₹62,311. You deposit ₹60,000 and earn ₹2,311.
Things to know
- RD interest is taxable at your slab rate, and TDS applies like an FD.
- Missing an instalment usually means a small penalty. Several missed payments can close the account.
- RDs suit short goals (1–3 years) like a holiday or a gadget. For 5+ years, a SIP or PPF usually grows more.
Frequently asked questions
RD or SIP: which is better?
An RD gives a guaranteed return and suits short goals. A SIP in an equity fund can grow much more over 5+ years, but its value goes up and down.
Can I withdraw an RD early?
Most banks allow premature closure with a lower interest rate. Post office RDs can be closed after 3 years.
Is RD interest compounded monthly?
No. Most banks and the post office compound RD interest quarterly, which is what this calculator uses.
Investing for 5+ years?
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