RD Calculator

How recurring deposits grow with compound interest

A recurring deposit (RD) is a disciplined savings plan where you contribute a fixed amount every month and earn compound interest on each installment until maturity. Banks and credit unions often quote an annual nominal rate, but the effective return depends on how frequently interest is compounded and how long each monthly deposit remains invested.

This RD calculator projects maturity value, total contributions, and interest earned using the standard per-installment compounding method. Quarterly compounding is the default used by many institutions following RBI-style interest computation rules. To compare lump-sum growth without monthly installments, use the lumpsum calculator. For broader portfolio modeling with contribution increases and inflation, try the investment calculator or the money market account calculator.

RD maturity formula

Unlike a single lump-sum deposit, each monthly installment in an RD compounds for a different length of time. The maturity amount is the sum of every installment's future value:

Where $P$ is the monthly deposit, $r$ is the annual nominal interest rate (as a decimal), $n$ is compounding periods per year (4 = quarterly, 12 = monthly, 2 = half-yearly, 1 = yearly), $N$ is the total number of monthly deposits, and $t_i$ is the remaining compounding periods for deposit $i$ until maturity.

The first deposit earns interest for the full tenure, while the final deposit earns interest only for its last fraction of a compounding period. More frequent compounding increases the effective yield because interest is credited sooner and begins compounding earlier.

Worked example

Suppose you deposit $500 every month for 5 years at 7% per year with quarterly compounding ($n = 4$). You make 60 deposits totaling $30,000 in principal.

1. Convert the annual rate to a quarterly period rate: $i = 7\% / 4 = 1.75\%$ per quarter.
2. The first $500 deposit compounds for 20 quarters (60 months), the second for 19 quarters, and so on until the last deposit compounds for roughly one quarter.
3. Summing each installment's future value gives a maturity amount of approximately $35,966.40, with $5,966.40 in total interest earned.

Switching the same inputs to monthly compounding ($n = 12$) raises the maturity to about $36,005 because interest is credited twelve times per year instead of four.

Choosing compounding frequency and tenure

Quarterly compounding is the conventional default for many bank RD products. Monthly compounding produces slightly higher returns, while half-yearly and yearly compounding produce lower effective yields at the same quoted annual rate. Longer tenures amplify the interest share because early deposits have more time to compound.

For systematic investing into market-linked funds rather than fixed deposits, model expected returns with the goal SIP calculator. To understand how compound interest behaves on a single principal, read the guide on the compound interest calculator.

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