since regular investments are involved in recurring deposits, manual calculations to find out the returns are not so easy. that’s where this calculator helps.
rd or recurring deposit calculators are used to find the recurring deposit returns without any hassle. using an rd calculator can save a lot of time and also helps in finding out accurate results.
investments on recurring deposits are compounded on a quarterly basis. so, it becomes complicated if you want to calculate the interests. but don’t worry, we got you covered. in this article, we will show how recurring deposit interests are calculated.
here is formula to calculate the interest for
1 day = (annual percentage*amount)/365
1 week = (interest of one day) * 7
1 month = 1 month = (interest of one day) * 30
let us assume ravi invested in a bank that offers an annual interest rate of 8%. now, using the above formulae, let’s try to calculate the interest that he can earn in 1 day, 1 week, 1 month and 1 year.
let us say ravi invested an amount of ₹10000/-
so, the interest for 365 days on his ₹1000 = (amount/100)*8 = (10000/100) * 8 = ₹800
for 1 day=(annual percentage*amount)/365 = (8%*10000)/365 = (8*10000)/(365*100)=₹2.19
for 1 week = (interest of one day) * 7 = 2.19 * 7 = ₹15.34
similarly for 1 month = (interest of one day) * 30 = ₹65.7
investments on recurring deposits are compounded on a quarterly basis. it is always better to plan the investments using a rd calculator. it gives you an idea about the maturity amount and interest rates. to calculate the maturity amount, use the below formula.
maturity amount =p*(1+r/n) ^ (nt)
in the above formula,
p = your installment amount
r = recurring interest rate in decimals (divide the interest rate with 100)
n = compounding frequency (number of quarters)
t = tenure
here is an example for easy understanding
let us say ravi starts investing ₹10000 in a recurring account for a tenure of 1 year (4 quarters). the interest rate that his rd account offers is 8%. now let us use the above formula to calculate the final maturity amount.
maturity amount = 10000*(1+ (0.08/4)) ((4*12)/12) = ₹10824.32
= 10000*(1+ (0.08/4)) ((4*11)/12) = ₹10753.10
similarly we need to calculate for all remaining months till 1 month
calculation for 1st month look like this = 10000*(1+ (0.08/4)) ((4*1)/12) = ₹10626.58
if you sum like above for all the months the total maturity amount that you will arrive at is ₹1, 25,293/-
calculating the returns from a recurring deposit is quite complicated. the formula itself contains several variables that have to be changed every month to arrive at the final amount. the manual calculation is tough and time-consuming, and that is where an investor can use an rd calculator to do the same task in a matter of seconds.
now let us see the benefits of using the CRED rd calculator.
as we already mentioned, it is complicated to do the calculations manually. these tough computations can be eliminated by using our rd calculator.
since the computer programme is taking care of the calculations, there is no chance of errors; if done manually, there is a high error probability.
rd calculator are fast and thus, save a lot of time. as soon as the required variable like interest rate, time period, and the investment amount is entered, the CRED rd calculator shows the results like the total investment, total interest earned, and maturity amount in a fraction of a second.
because of the clean user interface, this rd calculator is very easy to understand. most of the calculators provide both a slider and a typing option to enter the required values.
recurring deposits (rd) are one of the safest investment options. rds inculcate the investment habit among investors. since the investment amount is compounded every quarter, recurring deposits offer good returns over some time. it is always better to plan the recurring deposit investments using rd calculators. the returns of recurring deposits are higher than fixed deposits if invested with discipline.
most banks offer recurring deposits, but these interest rates change from bank to bank and may vary from time to time based on the benchmark rates. the interest rates are based on per annum.
here is the formula used to calculate the maturity amount of recurring deposits:
maturity amount = p*(1+r/n)^(nt)
p = principal, r = interest rate, n = compounding frequency, t = tenure
as of march 2021, the recurring deposit interest rates offered by some of the top banks like icici, hdfc, state bank of india and axis bank are 6.2-6.4%, 6.3%, 6.0%, 6.4-6.5%, respectively.
the following table shows interest rates of some other banks:
name of the bank
recurring deposit interest rate (per annum)
7.25 - 7.5%
6.5 - 6.75%
bank of maharashtra
5.5 - 6.0%
bank of india
6.25 - 6.3%
bank of baroda
6.0 - 6.25%
6.25 - 6.3%
central bank of india
6.25 - 6.4%
4.75 - 5.0%
recurring deposits are one of the safest and best investment options, which inculcate a habit of regular investments in the investors. in india, many banks offer recurring deposits whose interest rates vary from 4 to 7.5%. the minimum amount that one can invest in an rd account is ₹10. the minimum and maximum tenure to open a bank rd are 6 months and 10 years, respectively. the invested amount is compounded on a quarterly basis. in recurring deposits, premature and midterm withdrawals are not allowed. in case of premature withdrawal, some amount will be charged as a penalty.
reserve bank of india interest rate policy is the primary factor that affects the interest rate (including recurring deposit interest rates). rbi revises the interest rates every 3 months. rbi considers many factors like inflation, country economy stability etc., before revising the rates. in case of an economic downturn, rbi reduces the interest rate. this is bad for recurring deposit investors but good for businesses. in the case of good economic conditions, it will increase the rate. this scenario is good for rd depositors because they get more returns because of high rates.
banks have the freedom to set their interest rate for their customers. but due to competition and interest rate policy, banks can’t offer the rate they wish to.
the interest amount earned on the recurring deposit is not exempted from income tax. even section 80c doesn’t cover it. that means income tax has to be paid. the income tax department sets different buckets for income from various sources. they are:
rd interest income comes under “income from other sources”. so, while filing itr, you need to add interest income under it. tds is deducted only if the income from recurring deposit interest crosses ₹40000. bank will deduct 10% on the interest income if it is above ₹40000.
fixed and recurring deposits are two of the safest investment options chosen by most investors. but there are differences between them. as the name itself suggests, a fixed deposit is a deposit that can be made only once. that means an investor cannot invest money in his fixed deposit account at regular intervals. on the other hand, the recurring deposit is quite the opposite. investors can invest money in regular intervals till maturity. the investment tenure for a fixed deposit account ranges from 7 days to 10 years, but it ranges from 6 months to 10 years for recurring deposits. the interest rate for fixed deposits is constant, but for recurring deposits, it changes based on various factors.
yes, recurring deposit interest income is taxable, and it comes under “income from other sources.”
rd tenure ranges from 6 months to 10 years.
one can start an rd account with an amount as low as ₹ 500 with most of the banks. but it varies with different financial institutions.
senior citizens are paid with higher interest rates than the general public.
yes. fine will be charged.
rd investments are compounded on a quarterly basis.
one can invest a minimum of ₹100.