RD Calculator

What method does this RD calculator use?

This tool uses monthly compounding. The annual rate is divided by 12, and each monthly deposit is grown for the number of months it stays in the account: the first deposit for the full tenure and the last deposit for one month. The maturity amount is the sum of all those grown deposits, which is the same as treating every deposit as made at the start of its month.

Banks usually quote quarterly compounding, so will my bank’s figure match?

It may differ slightly. This tool compounds every month, while many banks describe their recurring deposits with quarterly compounding and their own rounding of instalments. The tool has no setting for quarterly compounding, so a bank’s maturity statement can come out a little different from the figure here even at the same headline rate.

Which interest rate is built in?

The rate field starts at 7% a year and carries no year or quarter label. Recurring deposit rates are set by each bank and revised from time to time, so there is no single figure the tool could track, and its starting value is not updated automatically. Enter the rate on your deposit receipt or the bank’s rate card, and let that document, the bank or a qualified chartered accountant decide the final figures.

What happens with a 0% rate or a cleared rate box?

A 0% rate, which is also what a cleared box becomes, is treated as 0%, so the maturity amount equals the deposits: ₹2,000 a month for 12 months returns ₹24,000 with ₹0 of interest. A negative rate is read as 0%. A deposit or tenure of zero or less returns a maturity amount of ₹0 instead of a table of lines.

Is there a minimum or maximum tenure?

The tool rounds the tenure to a whole number of months and accepts any positive value. It does not enforce the shortest or longest term of any bank, so very short or very long tenures will calculate even where no bank offers them. The tenure line in the result repeats the months used.

Why is the interest on a 12-month RD so much lower than the rate times the deposits?

Because each deposit is in the account for a different length of time. At 7% for 12 months with ₹5,000 a month, the tool shows ₹2,324 of interest on ₹60,000 deposited, not 7% of ₹60,000. On average the money is invested for only about half the year, and the “wealth gained” line is interest divided by total invested.

What is not included in the result?

Tax on the interest, tax deducted at source, penalties for a missed or late instalment, premature-closure rules, extra rates for senior citizens and any change of rate during the term are all outside this tool. It assumes every instalment is paid on time and the rate stays constant.