How the RD Calculator works
A recurring deposit (RD) is a bank savings product where you deposit a fixed amount every month for a chosen tenure, and the bank pays interest on the growing balance. Unlike a lump-sum fixed deposit, each monthly instalment earns interest only from the date it is deposited, so the calculation has to account for money entering the account at different times. Nearly all banks compound RD interest quarterly, matching their fixed-deposit convention, even though the customer deposits every month.
The formula
For a monthly deposit R, an annual interest rate r (as a percentage), and a tenure of t months, the standard recurring deposit maturity formula is:
M = R x [(1 + i)n − 1] / (1 − (1 + i)−1/3)
where i = r / 400 is the quarterly interest rate (the annual rate divided by 4 quarters and by 100 to convert from a percentage), and n = t / 3 is the number of quarters in the tenure. The −1/3 exponent in the denominator spreads each quarter's compounding evenly across the three monthly instalments that land inside it. This is the formula used by most Indian banks and post-office recurring deposit calculators, and it reduces cleanly to R × t (no interest) when the rate is 0%.
Worked example
Deposit $5,000 every month for 12 months at 6.5% annual interest. The quarterly rate is i = 6.5 / 400 = 0.01625 and n = 12 / 3 = 4 quarters. Plugging into the formula gives a maturity value of roughly $62,143. Total deposits over the year are $60,000, so the account earns about $2,143 in interest — noticeably less than a $60,000 lump sum would earn at the same rate, because most of the money was only in the account for part of the year.
What moves the maturity value most
- Tenure: longer tenures let both the compounding and the average time-in-account grow, so the interest share of the total grows faster than the tenure itself.
- Interest rate: because the money is deposited gradually, an RD is less sensitive to rate changes than a fixed deposit of the same total size — but the effect still compounds over long tenures.
- Deposit amount: maturity value scales linearly with the monthly deposit; doubling the instalment exactly doubles both the total deposited and the interest earned.
Assumptions and limits
This calculator assumes interest compounds quarterly and that deposits are made on time every month for the full tenure — missed or late instalments, penalty clauses, and premature-withdrawal reductions are not modeled, since these vary by bank. The result is a pre-tax maturity value; interest earned on an RD is generally taxable income, and some banks withhold tax at source once interest crosses a threshold set by local rules. Check your bank's specific terms and consult a tax professional for guidance on your situation — this tool performs the arithmetic only and is not financial or tax advice.