gauritanaya

ENಕನ್ನಡहिंदी

How RD interest is calculated (bank and post office)

Updated: 14 November 2026

An educational illustration, not financial, tax or investment advice. Figures are estimates from the formula shown. Your bank, fund house or the official scheme rules decide the actual amount.

Open the RD calculator

RD interest is calculated on each monthly instalment separately. The first instalment earns interest for the whole term, the last for just one month, and interest compounds every quarter. Banks and India Post both use this method for a recurring deposit (RD).

Quick answer

  • Each instalment grows as P × (1 + r/4)months ÷ 3 for the months it stays deposited.
  • Post office 5-year RD rate for October–December 2026: 6.7% a year.
  • ₹5,000 a month for 60 months at 6.7% matures at about ₹3,56,829. You deposit ₹3,00,000.
  • RD interest is taxable at your slab rate.

The method

For n monthly instalments of P, the RD calculator adds up each instalment’s value at maturity:

Maturity = Σ P × (1 + r ÷ 4)(n − k + 1) ÷ 3, for k = 1 to n

Instalment k stays in for (n − k + 1) months, which is (n − k + 1) ÷ 3 quarters.

Worked example: post office RD

Monthly depositTermRateYou depositMaturityInterest
₹5,00060 months6.7%₹3,00,000₹3,56,829₹56,829

A one-year bank RD of ₹5,000 a month at 7% matures at about ₹62,311.

Post office RD rules in short

  • Term: 5 years. Rate fixed when you open the account (6.7% for accounts opened October–December 2026).
  • Rates for new accounts are reviewed every quarter by the government.
  • Missing instalments usually costs a small default fee, and several missed months can stop the account. Check with the post office.

RD or something else?

  • RD vs FD: an RD builds a lump sum from monthly savings. If you already have the lump sum, an FD earns more because all the money is in from day one.
  • RD vs SIP: an RD is fixed and safe; a SIP in mutual funds may earn more over long periods but can fall.
  • RD vs PPF: PPF interest is tax-free but money is locked for longer. See PPF interest rules.

How to use the RD calculator

  1. Enter the monthly deposit and your bank’s or post office RD rate.
  2. Enter the tenure in months.
  3. Read the maturity amount and the interest, and look at the chart of growth.

Limits

Banks may round each quarter’s interest differently, so expect small differences from the passbook. Tax, TDS and default fees are not included.

Sources

If this page and the official notice disagree, follow the notice.

FAQ

How is RD interest calculated?
Each monthly instalment earns interest, compounded quarterly, for the months it stays deposited. The maturity is the sum of all instalments’ values.
What is the post office RD rate now?
6.7% a year for 5-year RD accounts opened from 1 October to 31 December 2026.
What does ₹5,000 a month in a post office RD give?
About ₹3,56,829 after 60 months at 6.7%, from ₹3,00,000 deposited.
Is RD interest taxable?
Yes. It is added to your income and taxed at your slab rate. Banks deduct TDS above the yearly limit.
Does the RD rate change during the term?
No. The rate on the day you open the account applies for its term. New accounts get the rate of their quarter.

Get the next update: X · Telegram

#RD#RecurringDeposit#PostOffice#Savings#Interest#Gauritanaya