Recurring Deposits (RD), also called Systematic Deposit Plan (SDP) are an investment instrument in which you have to make fixed monthly deposits, unlike a lump sum amount in FDs for a predetermined period(typically ranging from 6 months to 10 years). It is ideal for individuals who want to save a little each month and earn interest on the deposited amount. Once your RD matures, you receive your total investment along with interest.

Formula:

A=P× {(1+R/N )(Nt)-1}/1-(1+r/n) -1/n

Where:

A = Maturity amount

P = Principal amount (monthly installment)

R = Annual interest rate (in decimal form)

N = Number of compounding periods per year

t = Tenure of the deposit in years

Example:

If you deposit around

Total deposit: ₹60,000.00

Total interest earned: ₹1,986.20

Maturity amount: ₹61,986.20

Types of RD-

1.) Regular Recurring Deposit Account:

Regular Recurring Deposit Account is one the most common and easily available in most of the banks and NBFC’s. In this RD scheme you deposit a fixed amount every month for a set tenure, earning interest until maturity.

2.) Senior Citizen Recurring Deposit

This RD offers more rate of interest to senior citizens (above 60 years of age) than the regular rates, typically 0.5% to 0.75% more than the regular rate.

3.) NRE/NRO Recurring Deposit:

This RD is specially designed for Non-Resident Indians (NRIs), this RD allows deposits in Indian banks or NBFCs. Interest on NRE RDs is often tax-free in India.

4.) Flexi Recurring Deposit :

This RD gives you the flexibility to vary your monthly deposit amount instead of keeping it fixed for the entire tenure.

5.) Minor Recurring Deposit:

Opened on behalf of a child under 18 years of age, this RD is managed by a parent or guardian as a joint holder or nominee until the child reaches the age of majority.

Benefits of Recurring Deposit:

1.) Disciplined Way of Savings:

It helps you in saving money regularly that can help individuals to develop and maintain a consistent saving habit.

Example: You can invest Rs. 10,000 every month to sponsor your child’s education.

2.) Flexible Investment Tenure:

You can choose RD tenure as per your financial goals, typically ranging from six months to 10 years.

Example: You can invest a fixed amount every month for 7 years to build a fund for buying a house.

3.) Low Risk:

Recurring Deposits are considered as safe investment since they are not affected by market fluctuations.

Example: Even if the stock market falls, your RD will still earn the fixed interest rate promised by the bank.

What is an RD Calculator and How Does It Help?

An RD (Recurring Deposit) calculator is a simple tool that helps you find out the maturity value of your deposit at the end of the tenure. All you need to enter is:

Monthly deposit amount (like ₹5,000)

Deposit period (like 5 years)

Annual interest rate (like 7%)

In seconds, it shows you:

Total amount you will deposit

Total interest you will earn

The maturity value you can expect

How to Use Finanjo’s RD Calculator – Step-by-Step

· Enter your monthly RD amount (e.g., ₹3,000)

· Choose your deposit period (e.g., 5 years)

· Enter the annual interest rate (e.g., 6.8%)

· The calculator will instantly display the total deposit, interest earned, and maturity value along with a detailed table.

Tips to Make the Most out of RD

· Stay consistent – deposit every month without

· Choose a longer tenure – longer duration means more compounding

· Avoid premature withdrawals – breaking the RD reduces your interest

· Use RD for short to medium goals – like buying a bike, planning a trip, or saving for a gadget