Home News How is RD interest calculated?

# How is RD interest calculated?

833
4777

RDs (Recurring Deposits) are hugely popular as investment options for people in India. They enable smaller amounts as investments that you can also earn interest on. The investments should be deployed at periodic or regular intervals and almost all banks throughout India offer the provision of recurring deposits or RDs at attractive rates of interest.

Multiple online platforms and websites will help you calculate the amount that you can invest and earn with a recurring deposit. You can readily find out the amount that you will earn at the time of the RD’s maturity. The calculator will be showing instant results and you only have to enter the basic information like the amount of investment, rate of interest and tenure among other data.

## Interest offered by leading banking institutions on RDs:

You can use a recurring deposit calculator online that is offered by most Indian banks and financial institutions. Here’s taking a look at the rates of interest offered by these institutions for customers:

• SBI RD- 4.90-5.40%
• HDFC Bank RD- 3.50-5.50%
• ICICI Bank RD- 3.50-5.50%
• BOI RD- 5.50-6.40%
• Kotak RD- 4.40-5.30%
• Canara Bank RD- 4.45-5.50%
• Union Bank of India RD- 4.50-5.60%
• Central Bank of India RD- 4.25-5.10%
• Axis Bank RD- 4.40-5.50%
• Bank of Maharashtra RD- 4-4.90%

You can use the recurring deposit calculator for working out the money that you will get upon maturity of the recurring deposit (RD). You can use this calculator given by multiple banks and financial institutions or make use of a simple formula or calculation process for working out the amount in question. Also, you can instantly get results by using this calculator and the entire procedure is completely hassle-free. The interest generated by this account will be compounded on a quarterly basis.

### Calculating RD Interest- Things Worth Knowing

The interest on recurring deposit amounts will be compounded on a quarterly basis. The formula used is the following-

M =R[(1+i) n – 1]/1-(1+i) (-1/3)

In this case, M will be the maturity value and n will be the number of quarters in the entire tenure while R will be the monthly installment credited into the recurring deposit account. The rate of interest will be denoted by i. You can use the calculator seamlessly with the following steps:

• Key in the amount to be deposited each month.
• Key in the tenure of the recurring deposit (RD) investment.
• If you are using the calculator given by banks, the interest rate will be provided. If you are using the RD calculator offered by third-party platforms or website, then you have to enter the rate of interest.
• Click on the Calculator and you will get to see the final results instantly.

### Key aspects that you should note:

• There will be a penalty charged for delays in monthly deposits/payments into the RD account. The penalty will vary depending upon the period of the delay and bank/financial institution alike.
• The interest that you earn from the recurring deposit will be taxable.
• You can open a recurring deposit account by visiting the bank/financial institution’s branch, through mobile banking or through internet banking.
• The interest earned on the RD will be computed by applying the formula for compound interest. Deposits should be made each month although interest will be compounded on a quarterly basis.
• Senior citizens get an added interest rate from most banks or financial institutions.
• You will have to submit Form 15G/15H for enabling non-deduction of Tax Deducted at Source (TDS).
• The formula for working out the compound interest on RDs (Recurring Deposits) is the following- A = P(1+r/n) ^ nt and A is indicative of the final amount that is procured, P is the principal, n is the number of times that interest is compounded, r is the annual interest rate and t is representative of the tenure.
• If you are opening an RD (recurring deposit) account in the middle of any ongoing financial quarter, the amount deposited will be earning simple interest till the end of the subsequent month. Suppose you are opening the account in May. Hence, the amount will be earning interest till the end of June. The interest will thereafter be compounded with the commencement of a new quarter.

### On a closing note

You should certainly look at recurring deposits or RDs for investing and growing your money in comparatively shorter periods of time. RDs are given at attractive rates of interest while you can expect to benefit considerably from the power of compounding as well. You can always use an online recurring deposit calculator as mentioned, for working out how much you can earn for a particular investment amount within a specific duration or tenure. This is a good short-term investment option that you can always avail of.

Previous articleThe future of cybersecurity in Hong Kong
Next articleTop 5 Largest Army in the World
Pankaj Gola is the Chief SEO Expert and the Founder of Chop News Media. He has a very deep interest in all current affairs topics whatsoever. Well, he is the power of our team and he lives in Delhi. Who loves to be a self dependent person. As an author, I am trying my best to improve this platform day by day. His passion, dedication and quick decision making ability make him stand apart from others.