A Recurring Deposit (RD) lets you save a fixed amount every month and earn bank interest — ideal for salaried people building discipline for goals like travel, gadgets, festival expenses or emergency fund.
How RD works
You deposit the same sum each month for a fixed tenure (6 months to 10 years typically). Bank pays interest similar to FD rates. Each instalment earns interest for different periods — first deposit earns for full tenure, last deposit earns for one month.
RD vs FD
- RD — monthly savings, lower pressure on lump sum
- FD — one-time deposit, slightly simpler interest math
- Both are low-risk; rates vary by bank and tenure
Example
- Monthly deposit: ₹5,000
- Tenure: 3 years (36 months)
- Rate: 7% p.a. (illustrative)
- Total deposited: ₹1,80,000
- Maturity: approx. ₹1,95,000+ (use calculator for exact)
Things to know
- Missed instalments may attract penalty.
- Premature closure reduces interest.
- TDS rules similar to FD on interest income.
- Post office RD also available with its own rates.
Who should use RD?
- Beginners starting investment habit
- Short-term goals within 1–5 years
- Anyone wanting safe returns without market risk
Use Master Calc RD Calculator
Enter monthly amount, interest rate and tenure in our RD Calculator to see maturity value and interest earned. Compare with FD Calculator for lump-sum alternative — free on Master Calc.
FAQ
Is RD interest taxable? Yes, added to income and taxed per your slab.
Can I increase RD amount mid-way? Usually no — start new RD or wait for maturity.
Disclaimer: Bank rates differ. Results are estimates for planning.