RD Calculator

What do you mean by RD (Recurring Deposit)?

Recurring Deposit (RD) is an investment cum saving option offered by the Indian Banks and Post Office to the investors. It is a similar product to FD. The only point of difference is that in FD, you invest a lumpsum amount once. Whereas in RD, you deposit a fixed amount every month.

RD is a flexible investment option, as the users can decide the investment tenure and monthly amount at their convenience. The interest rate and the investment tenure are determined beforehand. The RD scheme aims to instil the habit of regular saving in the customer.

You can start an RD account with as little as Rs.1000 monthly. The initial or the minimum deposit can also vary from bank to bank. The minimum investment tenure is six months & the maximum investment tenure is 10 Years. In case of any emergency, you can deposit the amount pre-maturely after fulfilling the conditions that your respective bank imposes.

What is an RD calculator?

An RD calculator is an online tool that enables you to calculate the maturity amount for your RD account. The calculation of the RD investment involves complex formulas and equations. But don’t worry, that’s where Pocketful’s online RD calculator comes to your rescue.

Our online RD calculator has a user-friendly interface, which is suitable for beginners as well. It helps you compare the returns on RD account deposits offered by various banks. It also assists you in doing your financial planning accordingly, depending on your financial goals.

How does an RD calculator work?

Like all the other investment return calculators, the RD calculator works on the compounding interest calculator formula.

The formula is given below:

A = P[(1+I)^N-1]/(1-(1+I)^(-1/3))

A	Maturity Amount
P	Monthly installment amount
N	Number of quarters
I	Interest rate

Let’s understand it with an example.

Suppose Mr. X wants to open an RD account in SBI Bank. He decided to invest INR 5,000 monthly for the next five years. The bank is offering an interest rate of 8% on the RD account.

Well, in this case, “P” will be 5,000, “I” will be 8% & “N” will be 60.

The maturity amount that Mr. X will receive at the end of five years will be INR 3,69,309.

How to use Pocketful’s online RD Interest calculator?

Our online RD calculator is user-friendly and free to use. Just follow the simple steps mentioned below:

Step 1:

Enter the monthly investment amount you want to invest and interest rate offered on the RD by your Bank.

Step 2:

Select the desirable investment tenure. Voila! You will get your total investment amount, estimated returns, and the total amount that you will receive at maturity.

Features of an RD

1. RD’s are not just a savings scheme, infact, they cultivate a habit of savings. It plays a significant role in your financial discipline
2. They can be used as collateral against the loan. You can take a loan against your RD deposit from the bank.
3. RD allows you to make withdrawals before the maturity of your investment. In case of any financial emergency, you can close your RD account and withdraw the amount. The bank will provide the interest on your investment accordingly but charge a penalty which differs from bank to bank.
4. For senior citizens aged above 60, interest rates offered on RD accounts are higher as compared to regular RD.
5. RD accounts can be opened in the name of minors under the supervision of their guardians.

Taxation on RD account

Similar to fixed or term deposits, recurring deposit schemes also attract taxes. The interest earned from RD investment is taxed as per your income tax slab.

Further, a TDS of 10% is deducted from the interest accrued from an RD if the total interest exceeds INR 40,000 (INR 50,000 for senior citizens) in a financial year.