Recurring deposit interest calculator:
what your monthly savings add up to

How a recurring deposit earns interest

A recurring deposit (RD) asks you to deposit a fixed amount every month for a fixed tenure. At the end you receive your deposits and the interest on them.

The key point is that each instalment stays in the deposit for a different length of time. In a 24-month RD, the first instalment earns for all 24 months and the last earns for only one. Applying the full rate for the full tenure to the total deposited would badly overstate the interest.

Banks usually state a yearly rate and compound it, often quarterly, but your deposit terms decide the method. The calculation below uses quarterly compounding, which is a common convention.

That is the difference from a fixed deposit, where one lump sum is in for the whole term, and from a SIP, where the return is not fixed in advance. An RD suits someone who earns monthly and wants a known result, with the rate agreed on the day the deposit opens.

RD maturity formula

1. 1Put the monthly instalment in one cell and the annual rate in another.
2. 2Divide the rate by 400 to get the quarterly rate i.
3. 3Divide the number of months by 3 to get n.
4. 4Work out (1 + i)ⁿ − 1, then divide it by 1 − (1 + i)^(−1/3).
5. 5Multiply the result by the instalment to get the maturity amount.

The numerator is the quarterly growth factor. The denominator converts it into a monthly series, since you pay monthly but interest compounds quarterly.

If you want an approximate check without the formula, remember that the average instalment stays in for about half the tenure. Over 24 months that is roughly 12.5 months, so the interest is close to M × months × rate × 12.5 ÷ 12, plus a little for compounding.

Example: ₹3,000 a month for 24 months at an assumed 6%

Suppose you open a 24-month RD of ₹3,000 a month and assume a nominal rate of 6%, compounded quarterly. That is a quarterly rate of 1.5% and eight quarters.

The (1.015⁸ − 1) ÷ (1 − 1.015^(−1/3)) factor is about 25.55, and ₹3,000 × 25.55 gives roughly ₹76,653. Of the ₹4,653 interest, about three-quarters comes from the first twelve instalments, which stay in for more than half the tenure.

You can see the difference between instalments directly. The first ₹3,000 grows to about ₹3,379 over its 24 months, while the last ₹3,000 earns about ₹15 in its single month.

RD maturity by tenure

Interest does not grow in a straight line with tenure. Doubling the tenure from 12 to 24 months raises the interest by about 3.9 times, because later instalments sit in the deposit for longer and earn on a larger balance.

It is also worth knowing what a lump sum would do. ₹72,000 placed in a 24-month deposit at the same assumed 6%, compounded quarterly, would reach about ₹81,107, because all of it is in for the full term. The RD's ₹76,653 is lower since the money arrives a month at a time.

To choose a tenure, match it to the date you need the money. If the goal is a fee due in 18 months, a 24-month RD means breaking it early, which usually brings a lower rate or a penalty. Choose the tenure first and the instalment second.

Why different calculators give slightly different answers

The three answers sit within ₹381 of one another. That is small, but it explains why your bank's figure may not match a calculator exactly. Check which compounding frequency and instalment date your bank uses, then pick the matching method.

A quick sanity test: divide the interest by the total deposited times the average time in the deposit (about 12.5 months here). ₹4,653 ÷ ₹75,000 is roughly 6.2%, a little above the 6% nominal rate because of compounding. If your answer works out to something far from the quoted rate, recheck the inputs.

Plan backwards from a target, and avoid common errors

To find the monthly instalment for a target, divide the target by the growth factor. For ₹1,00,000 in 24 months at an assumed 6%, quarterly compounding, you need about ₹3,914 a month. At an assumed 5% it is about ₹3,955, and at 7% about ₹3,873.

It helps to see where an RD sits against a market-linked SIP of the same ₹3,000 for 24 months. At an assumed 12% the SIP would project to about ₹80,920, but at a flat 0% it would be ₹72,000, below the RD. Only the RD figure is known when you open the account.

• Applying the full-tenure interest rate to every instalment.
• Comparing a nominal RD rate with an effective yield without converting.
• Missing instalments: banks usually charge a penalty for each missed or late instalment, and repeated misses can lead to the account being closed, so confirm the terms before you start.
• Forgetting tax on the interest, which is generally taxable income for you.
• Assuming the rate stays the same when you renew; RD rates change from one deposit to the next.

Closing an RD before maturity generally pays a lower rate on the amount held and may carry a charge, so ask the bank for the exact computation before you decide. Set up an automatic debit on a date just after your salary arrives, so the instalment is never the thing that slips.