How RD Maturity Is Calculated
A Recurring Deposit (RD) lets you invest a fixed amount every month and earns compound interest, usually compounded quarterly. Each monthly instalment earns interest for the time it stays invested — so the first instalment earns the most.
FD vs RD
| FD | RD | |
|---|---|---|
| Investment | One lump sum | Fixed amount every month |
| Best for | Surplus you already have | Building savings from monthly income |
| Interest | Compounded quarterly | Compounded quarterly |
Why an RD Is Useful
- Builds a savings habit with small, fixed monthly deposits.
- Guaranteed, predictable returns with no market risk.
- Great for short- to medium-term goals (1–5 years).
Frequently Asked Questions
Can I miss an RD instalment?
Missing instalments usually attracts a small penalty and may affect maturity. Most banks allow a short grace period.
Is RD interest taxable?
Yes, RD interest is taxed as per your slab, with TDS applicable above the threshold.