RD Calculator (Recurring Deposit)
RD Calculator (Recurring Deposit)
The maturity value of a recurring deposit — a fixed amount paid in every month — with interest compounded quarterly, the method Indian banks and the post office use.
Recurring deposit
$5,000 a month for 12 months at 8% a year
RD maturity with quarterly compounding
- R
- the monthly instalment
- r
- the annual rate in %; r ÷ 400 is the quarterly rate
- q
- the growth over one month at that quarterly rate
- N
- the number of monthly instalments. With N = 3n this is the formula banks publish, M = R[(1 + i)n − 1] ÷ [1 − (1 + i)−1/3]
- after tax
- the same formula at r × (1 − tax), because tax is taken from each quarter’s interest. The real return is (1 + r(1 − tax) ÷ 400)4 ÷ (1 + inflation) − 1, the yearly rate every instalment earns in today’s money
Worked example
$5,000 a month for 12 months at 8% a year
i = 8 ÷ 400 = 0.02; q = 1.021/3 = 1.006623
The first instalment grows for 12 months, the last for one: M = R × (q + q2 + … + q12)
M = 5,000 × 1.006623 × (1.024 − 1) ÷ (1.006623 − 1) = $62,647
Paid in $60,000; interest $2,647 — the figure ICICI Bank publishes for this example
5,000 a month at 7%, by tenure
| Tenure | Maturity value | Interest earned |
|---|---|---|
| 12 months | $62,311 | $2,311 |
| 24 months | $1,29,099 | $9,099 |
| 36 months | $2,00,686 | $20,686 |
| 60 months | $3,59,664 | $59,664 |
| 120 months | $8,68,509 | $2,68,509 |
Where the formula comes from
A recurring deposit is a row of small fixed deposits, one per month. Each instalment earns interest from the day it is paid until maturity, compounded quarterly, so the first grows for the whole tenure and the last for a single month. Adding them up gives a geometric series, and summing the series gives the formula above. It is the same formula ICICI Bank prints on its RD calculator, written for months rather than quarters; the page reproduces ICICI Bank’s own example of 5,000 a month at 8% for a year.
As a second check, Business Standard (15 December 2005) gave 100 a month for 60 months in a post-office RD as 7,289 at maturity. The formula gives exactly that at 7.5%, the post-office RD rate of the time — though the article itself prints 8%, which would give 7,386. Post-office and bank RDs both compound quarterly; the rate is what differs, and it is set for each new account, so enter the one you are offered.
Banks work in days and may credit interest slightly differently within a quarter, so an official figure can differ by a few rupees. Missed or late instalments usually carry a penalty. RD interest is taxable and TDS may apply, and closing the deposit early normally means a lower rate. For a single lump sum use the FD calculator; for monthly investing in mutual funds, where returns are not fixed, the SIP calculator.
Tax and inflation take more than the headline suggests. At 7%, for a depositor whose marginal rate on interest is 30% and with 5% inflation, $5,000 a month for five years matures at $3,40,371 after tax, worth $2,66,690 in today’s money. Count each instalment in today’s money as well and they add up to $2,66,752. In real terms the deposit hands back almost exactly what went in: a real return of −0.009% a year, the same as a fixed deposit at that rate. The chart shows the RD’s value, what you have paid in, and the after-tax value in today’s money. Tax here is taken from each quarter’s interest, a simplification; your real tax depends on your country, slab and thresholds. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How is RD maturity calculated?
M = R × q × (qN − 1) ÷ (q − 1), with q = (1 + rate ÷ 400)1/3 and N months. $5,000 a month for 12 months at 8% gives $62,647.
Is RD interest compounded monthly or quarterly?
Quarterly, at Indian banks and the post office, even though you pay in monthly.
Which is better, RD or FD?
For the same rate, a lump sum in an FD earns more, because all of it earns interest from day one. An RD suits money you save month by month.
Is RD interest taxable?
Yes. It is taxable income, and the bank may deduct TDS. Check the current rules.
What is an RD’s real return?
(1 + rate × (1 − tax) ÷ 400)4 ÷ (1 + inflation) − 1. At 8% with no tax and 4% inflation it is 4.08% a year; at 7% with a 30% tax rate and 5% inflation it is −0.009%.
Related calculators
References
- ICICI Bank. RD Calculator (accessed September 2026): M = R[(1 + i)n − 1] ÷ (1 − (1 + i)−1/3), i = rate ÷ 400, n = quarters; example 5,000 a month at 8% for one year matures at 62,647.
- Axis Bank. Terms and Conditions — Fixed Deposits and Recurring Deposits (accessed September 2026): cumulative deposits “compounded anniversary quarter and paid at maturity”; the discounted monthly-payout rate = ROI × 3 ÷ [1 + (1 + ROI/12) + (1 + ROI/12)2], with the worked example 7.20% → 7.156%; recurring deposit interest “applied on a quarterly compounding basis”.
- Central-bank inflation targets used as default inflation by currency: Reserve Bank of India (4% CPI, flexible inflation targeting framework); U.S. Federal Reserve (2% PCE); European Central Bank (2%); Bank of England (2% CPI); Bank of Canada (2%); Reserve Bank of Australia (2–3%); Bangko Sentral ng Pilipinas (3% ± 1). Actual inflation often runs above target.
- Vidyalaxmi. Bank deposits vs post office savings. Business Standard, 15 December 2005: 100 a month for 60 instalments in a post-office RD gives 7,289 after 5 years.