About Recurring Deposits
Recurring Deposit (RD) is a popular savings instrument offered by banks and financial institutions that allows individuals to deposit a fixed amount regularly and earn interest on their savings. Our RD calculator helps you estimate the maturity value of your recurring deposit investment based on your monthly contribution, interest rate, and tenure.
Using our RD calculator is simple – just enter your monthly deposit amount, the annual interest rate offered by your bank, and the tenure in months. The calculator will instantly show you the total maturity amount, total deposits made, and the interest earned on your investment. This helps in financial planning and making informed decisions about your savings.
Recurring deposits are an excellent way to cultivate a regular savings habit while earning higher interest than regular savings accounts. They offer guaranteed returns and are considered low-risk investments suitable for conservative investors and those with fixed income.
Frequently Asked Questions
What is a Recurring Deposit (RD)?
A Recurring Deposit is a type of term deposit offered by banks that allows people to save a fixed amount every month and earn interest on their savings. The deposit has a fixed tenure and the maturity amount is paid at the end of the term.
How is RD interest calculated?
RD interest is typically calculated using the formula for quarterly compounding. The interest is compounded every quarter, which means the interest earned is added to the principal every three months, and subsequent interest is calculated on this new amount.
Can I withdraw my RD before maturity?
Yes, most banks allow premature withdrawal of RDs, but it usually involves a penalty. The interest payable may be reduced, and some banks may not pay interest for the broken period. It’s best to check with your specific bank for their premature withdrawal policies.
What is the minimum tenure for an RD?
The minimum tenure for a recurring deposit is typically 6 months, though this can vary by bank. The maximum tenure is usually 10 years. Some banks may offer different tenure options, so it’s advisable to check with your bank for specific details.
Are RD returns taxable?
Yes, the interest earned on RDs is fully taxable under the Income Tax Act. Tax Deducted at Source (TDS) is applicable if the interest income exceeds a certain threshold in a financial year.
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