RD Calculator - Recurring Deposit Calculator Online India

RD Calculator: Are RDs better than FDs? What its benefits and interest rates are

Recurring Deposits (RDs) are considered a great investment instrument, which is quite similar to fixed deposits (FDs). In RDs, people are required to make fixed monthly payments, unlike the lump sum amount deposited in the FDs. However, calculating the returns of a recurring deposit can be a tedious and complicated task as it requires a lot of calculations. Hence, an RD calculator can be a highly beneficial tool that not only saves plenty of time but also figures out accurate results for you.

What is a Recurring Deposit?

Offered by banks, including both private and public, as well as other financial institutions, a recurring deposit is a financial product that requires an individual to deposit a fixed amount of money at regular intervals, typically every month, for a specified time period. These have a fixed tenure and individuals are provided a fixed interest rate throughout the deposit term.

The interest rate on the recurring deposit, depending from bank to bank, is often compounded quarterly or annually. At the time of maturity, the account holder becomes eligible to get the total deposited amount along with the accumulated interest on it.

One of the most sought-after financial products, these are majorly favoured by conservative investors looking forward to steady returns. While offering the security of a fixed return, a recurring deposit provides a reliable avenue to the individual for accumulating funds over time.

RD benefits and advantages

There are multiple benefits to putting your hard-earned money into a recurring deposit. Some of these include:

1. No risk of market

Unlike the risks borne by investors while putting money into stocks or mutual funds, RDs do not expose the person to market risks as they are considered a safe and stable investment option for the ones aiming for predictable returns.

2. Stable returns

Those investing money into RDs get stable and predictable returns as the banks' interest rates remain fixed for the entire tenure of the deposit. So, at all times there is a sense of security and peace of mind in the mind of investors. Moreover, senior citizens have the opportunity to earn 0.5% extra interest.

3. Easily accessible

To invest in RDs, people are simply required to visit their nearby banks and financial institutions. This makes them easily accessible to a wide range of individuals, especially the ones residing in rural areas.

4. Flexible tenure

While applying for the same, customers have the flexibility option of choosing the tenure of the deposit that ranges between a few months to several years. This allows people the opportunity to align their savings based on short-term or long-term financial goals.

5. Less minimum deposit

Multiple banks in the country have the option for low minimum deposit requirements in RDs. This makes it accessible to individuals in low-income levels and an inclusive savings option for a wide range of citizens of the country.

6. Easy withdrawal and automatic renewal options

Besides offering flexibility in withdrawal options that allow people to prematurely withdraw funds in case of emergencies -- incurring certain penalties or charges -- certain banks also offer the automatic renewal option to the customers on RDs. This automatically renews the deposit for another term upon maturity and ensures continuity of savings.

Tax benefits on RD

Individuals must note that the total interest earned on the RDs is taxable. A 10% TDS will be deducted at the source if the total interest earned from RDs exceeds ₹10,000 in a financial year.

Hence, taxpayers are required to show all interest earned from RDs as income from other sources whenever they file their tax returns.

To determine the RD amount on maturity, the RD calculator plays a major role.

What is an RD calculator?

The RD calculator eliminates the hassle of computing the returns manually and provides a tool for individuals to know the exact amount their deposits will accrue upon maturity.

The calculator also provides the option of bifurcating the maturity amount into the total amount invested and the total interest earned on it.

Since the interest rates are higher for senior citizens, the calculator also has the feature to calculate the maturity amount for them. Also, users have the option of comparing the alternative options based on the tenure and rate.

Formula to calculate RD

The standard formula to calculate the RD maturity amount is: A = P X (1+R/N)^Nt

Here, M stands for the maturity amount, P is the amount of periodic investment, R is the interest on RD in decimals, t is the tenure or time duration of the RD and N is the compounding frequency.

This standard RD calculation formula can be used to determine the maturity amount on RD. However, doing it manually will take a lot of time. Hence, it is a better option to go for an RD deposit calculator. While using the tool, you just are required to provide all the necessary variables like the RD amount, tenure, and interest rates. Thereafter, the calculator will automatically apply the given formula and showcase the maturity amount.