How RD maturity is calculated
Each monthly instalment earns interest for the time it stays deposited. The first one earns for the full tenure, the last one for a single month. Banks compound quarterly, so each instalment grows as:
Here R is the monthly deposit, r is the annual rate, and m is the number of months that instalment stays invested. The maturity value is the sum over all instalments.
Example
₹5,000 a month for 5 years at 6.7% (the current post office RD rate): you deposit ₹3 lakh and receive about ₹3.57 lakh.
RD vs SIP
An RD gives a guaranteed return and suits short-term goals like a trip or an emergency fund. A SIP in an equity mutual fund has no guarantee but has historically done better over 5+ years. Compare with our SIP calculator.
Frequently asked questions
Is RD interest taxable?
Yes, at your slab rate, like FD interest. TDS may apply above the yearly threshold.
What happens if I miss an instalment?
Banks usually charge a small penalty for late instalments. Missing several in a row can lead to the RD being closed early.
Estimates only. Your bank's figure may differ slightly due to rounding and its exact interest method.