How FD maturity is calculated
Indian banks usually compound fixed deposit interest every quarter. The maturity value is A = P × (1 + r/n)n×t, where P is the deposit, r the annual rate, n the number of compounding periods per year (4 for quarterly) and t the term in years. ₹1,00,000 at 7% for one year with quarterly compounding grows to about ₹1,07,186, so the effective annual yield is 7.19% rather than 7%. If you choose monthly or quarterly payout instead, interest is paid out and does not compound – pick "simple / payout" to see that figure.
How RD maturity is calculated
In a recurring deposit you pay the same amount every month. Banks compound RD interest quarterly too, but each instalment earns interest only for the time it stays in the account: the first instalment for the full term, the last for just one month. This calculator adds up each instalment separately using M × (1 + r/4)months left ÷ 3, which is the method used by most Indian banks and post-office style RD tables. ₹5,000 a month for five years at 6.5% matures to about ₹3,54,950.
FD vs RD: which one?
- FD suits a lump sum you already have – a bonus, maturity proceeds or savings parked for a goal.
- RD builds the habit of saving from monthly salary and earns more than a savings account.
- For the same rate and term, an FD earns more total interest because the whole amount is invested from day one.
- Senior citizens usually get an extra 0.25–0.50% on both; enter your bank's actual rate.
Tax on FD and RD interest
Interest from FDs and RDs is fully taxable at your slab rate, whether you receive it or it is reinvested. Banks deduct TDS when the year's interest crosses the threshold set by the Income Tax Act; if your total income is below the taxable limit you can submit Form 15G (or 15H if you are 60 or older) to avoid TDS. Compare the post-tax return with options such as PPF, whose interest is tax-free.
Tips for better returns
- Ladder deposits: split a large amount into several FDs with different maturities so you are never locked in at one rate.
- Check premature withdrawal penalties (often 0.5–1%) before booking a long term.
- Small finance banks often pay more; deposits are insured by DICGC up to ₹5 lakh per bank per depositor.
Results are estimates; your bank's figure can differ by a few rupees because of rounding and day-count rules. For information only, not financial advice. A free tool from Yakuza Gang.
Frequently asked questions
How is FD interest calculated in India?
Most banks compound quarterly: A = P × (1 + r/4)^(4t). ₹1 lakh at 7% for a year becomes about ₹1,07,186.
How is RD maturity calculated?
Each monthly instalment is compounded quarterly for the time it stays deposited, and the results are added up.
Is FD interest taxable?
Yes, at your income tax slab rate. Banks deduct TDS above the legal threshold unless you submit Form 15G or 15H where eligible.
Which earns more, FD or RD?
At the same rate and term an FD earns more interest because the full amount is invested from the start.
Are bank deposits safe?
Deposits are insured by DICGC up to ₹5 lakh per depositor per bank, including interest.