Calculate exact maturity values, quarterly compound interest earned, and senior citizen rate enhancements (+0.50%) for monthly term deposits.
Senior Citizen (+0.50% p.a.)
Years
Months
Total Maturity Payout
₹62,344.19
Total Invested
₹60,000.00
Interest Earned
₹2,344.19
Principal: 96.2%Interest: 3.8%
View Quarterly Compounding Math Breakdown
Per Indian Banks' Association (IBA) quarterly compounding rules, each monthly deposit $P$ ($=₹5,000.00$) earns interest for the exact number of completed months ($k$) until maturity:
Maturity = Σ [ P × (1 + r / 4)^(k / 3) ] for k = 1 to 12
Effective Quarterly Rate = 1.775% per quarter across 12 monthly installments.
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About the Recurring Deposit (RD) Calculator
A recurring deposit is a term savings product in which a fixed sum is deposited every month for an agreed tenure at an interest rate locked in when the account opens. It occupies a useful middle ground between a savings account, which pays little, and a fixed deposit, which demands the entire sum up front. Because each monthly installment is deposited at a different time, each one earns interest for a different length of time — the first installment compounds across the whole tenure while the final one earns almost nothing — which is why recurring deposit maturity cannot be worked out with a single compound interest calculation. Indian banks follow the Indian Banks' Association convention of compounding quarterly, so the maturity value is the sum of every installment grown independently to the maturity date. Recurring deposits suit disciplined short-to-medium-term goals where capital protection matters more than returns, since the rate is guaranteed and unaffected by market movement.
Mathematical Formula & Logic
Recurring deposit maturity is the sum of each installment compounded separately.
1. Per-installment growth (quarterly compounding):
For the installment deposited with k months remaining until maturity:
Value at maturity = P × (1 + i/4)^(k/3)
Where P is the fixed monthly deposit and i is the annual interest rate
as a decimal. Dividing i by 4 gives the quarterly rate; dividing k by 3
converts months of remaining tenure into quarters.
2. Total maturity value:
M = Σ P × (1 + i/4)^(k/3) for k = n, n−1, ... , 1
Where n is the total number of monthly installments.
3. Total deposited and interest earned:
Total Deposited = P × n
Interest Earned = M − Total Deposited
4. Why a single compound formula does not work:
The first installment earns interest for the full tenure while the last
earns interest for roughly one month. Treating the total deposited as a
lump sum would dramatically overstate the maturity value.
Step-by-Step Example
Calculate the maturity of a 5,000 monthly recurring deposit for 24 months at 7 percent per annum:
1. Monthly deposit P = 5,000, annual rate i = 0.07, tenure n = 24 months.
2. Quarterly rate = 0.07 ÷ 4 = 0.0175.
3. The first installment has 24 months, or 8 quarters, to grow:
5,000 × (1.0175)^(24/3) = 5,000 × (1.0175)^8 = 5,000 × 1.14888 = 5,744.40
4. The twelfth installment has 13 months remaining:
5,000 × (1.0175)^(13/3) = 5,000 × 1.078076 = 5,390.38
5. The final installment has 1 month remaining:
5,000 × (1.0175)^(1/3) = 5,000 × 1.00580 = 5,029.00
6. Summing all 24 installments computed this way gives a maturity of approximately 129,099.
7. Total deposited = 5,000 × 24 = 120,000.
8. Interest earned = 129,099 − 120,000 = 9,099.
Notice that the effective return on the total deposited is about 7.58 percent across the two years, not 14 percent, precisely because the average installment was invested for only about half the tenure. This is the single most common misunderstanding about recurring deposits.
Reference Data & Values
monthly deposit
tenure
rate
total deposited
approx maturity
5,000
12 months
7.0%
60,000
62,311
5,000
24 months
7.0%
120,000
129,099
5,000
36 months
7.0%
180,000
200,686
5,000
60 months
7.0%
300,000
359,664
10,000
24 months
7.5%
240,000
259,552
10,000
60 months
7.5%
600,000
728,897
Frequently Asked Questions
Because only the first installment earns interest for the full tenure, while every subsequent one earns for progressively less time and the final installment earns for barely a month. The average installment is invested for roughly half the tenure, so the effective yield on the total amount deposited is a little over half what the headline rate would produce on a lump sum. A 5,000 monthly deposit for 24 months at 7 percent earns about 9,099, not the roughly 17,900 that 7 percent compounded on a 120,000 lump sum for two years would produce. This is arithmetic, not a hidden charge.
A fixed deposit requires the entire principal at the outset and every rupee earns interest for the full tenure, whereas a recurring deposit accepts a fixed monthly installment and each one earns for a shorter period than the last. For the same nominal rate and tenure, a fixed deposit therefore produces meaningfully more interest per rupee invested. The recurring deposit exists not because it earns more but because it matches how salaried income actually arrives, allowing someone to build a corpus from monthly cash flow rather than needing a lump sum first.
Both accept a fixed monthly amount, but they differ fundamentally in risk and return. A recurring deposit offers a contractually guaranteed rate with no market exposure and full capital protection, which makes it suitable for goals within a few years where the amount must be certain. A systematic investment plan into mutual funds carries market risk and can lose value in the short term, but has historically delivered higher long-run returns. The practical rule is to use recurring deposits for near-term certain goals and market-linked plans for long-horizon goals where volatility can be absorbed.
Yes. Interest from a recurring deposit is fully taxable as income from other sources and is added to total income, then taxed at the applicable slab rate. Banks deduct tax at source once interest across deposits with that bank exceeds the prescribed annual threshold, and the deducted amount can be adjusted against final liability when filing a return. Because the interest is taxed at the marginal slab rate, the post-tax return for a higher-rate taxpayer is substantially below the headline figure, which is worth factoring in when comparing against other instruments.
Most banks levy a penalty for each missed installment and may extend the maturity date, and repeated defaults can lead to premature closure of the account with interest recalculated at a lower rate. The specific penalty and the number of defaults tolerated vary by bank and are set out in the account terms. Because the maturity calculation assumes every installment arrives on schedule, missed payments reduce the final value by more than just the missing deposit, since that installment also forgoes all the compounding it would have earned.
Premature closure is generally permitted but almost always carries a penalty, typically applied by recalculating the entire interest at a rate below the contracted one, sometimes reduced by around one percentage point. Some banks offer a loan or overdraft against the deposit balance instead, which lets you access funds without breaking the deposit and forfeiting the rate. Because the penalty applies to the whole tenure rather than just the remaining period, breaking a recurring deposit near maturity is particularly costly.