Recurring Deposit (RD) — How to Open RD Account Online, Interest Rates & Calculator

A Recurring Deposit (RD) is one of the simplest ways to build savings in India. Instead of investing a lump sum like a Fixed Deposit, you deposit a fixed amount every month and earn interest on the accumulated balance. It's ideal for salaried individuals, students, and anyone who wants to cultivate a disciplined savings habit.

This guide covers current RD interest rates, how to open an RD account online, the maturity calculation approach, tax rules, and how RD compares with FD and SIP.

What Is a Recurring Deposit?

A Recurring Deposit is a term deposit offered by banks and post offices where you invest a fixed sum every month for a chosen tenure. At the end of the tenure, you receive your total deposits plus compound interest.

Key features of RD:

• Fixed monthly investment — deposit the same amount every month
• Compounding interest — interest is compounded quarterly in most banks
• Flexible tenure — typically 6 months to 10 years
• Low minimum deposit — start with as little as ₹100 per month
• Safe & insured — bank RDs up to ₹5 lakh are covered by DICGC
• No market risk — returns are guaranteed at a fixed interest rate

How Does a Recurring Deposit Work?

1. Choose your bank or post office and open an RD account
2. Select monthly deposit amount (e.g., ₹1,000, ₹5,000, ₹10,000)
3. Choose tenure — from 6 months to 10 years
4. Deposit every month — on a fixed date via auto-debit or manual transfer
5. Earn quarterly compounded interest on the accumulated balance
6. Receive maturity amount — total deposits + accrued interest at the end of tenure

Each monthly instalment earns interest from its date of deposit until maturity. Earlier instalments earn more interest since they stay invested longer.

RD Interest Rates — Comparison Table

Note: RD interest rates are indicative and change periodically. Always verify the latest rates on the respective bank's or post office's official website before opening an account.

Rates as of early 2026. Senior citizens typically receive an additional 0.25%–0.50% across banks. Post Office RD rates are set by the Government of India and revised quarterly.

Key Observations

• Bank RDs generally offer slightly higher rates than the Post Office for longer tenures
• Senior citizens get preferential rates at all major banks (not applicable at Post Office)
• Post Office RD has a fixed 5-year tenure; shorter tenures shown above are for bank RDs only
• RD rates are usually the same as the bank's FD rates for the corresponding tenure

RD Maturity Calculator — How to Calculate Returns

The maturity value of an RD depends on three factors: monthly deposit (P), interest rate (r), and tenure (n months). Since interest compounds quarterly, the formula is:

Maturity Amount = P × [(1 + r/4)^n – 1] / [1 – (1 + r/4)^(-1/3)]

Quick Example

• Monthly deposit: ₹5,000
• Tenure: 5 years (60 months)
• Interest rate: 7.00% p.a.

Approximate maturity value: ₹3,58,000 (Total deposits: ₹3,00,000 | Interest earned: ~₹58,000)

Tip: Use the RD calculator on your bank's website or apps like SBI YONO, HDFC Mobile Banking, or iMobile for exact figures. The calculation accounts for quarterly compounding and the exact number of days.

Minimum Monthly Deposit by Bank

• Deposits must be in multiples of ₹10 or ₹100 depending on the bank
• Some banks allow you to increase the deposit amount during the tenure (flexi-RD)

How to Open an RD Account Online

Opening an RD account online takes just a few minutes if you already have a savings account with the bank. Here's the general process:

Step-by-Step Process

1. Log in to your bank's internet banking portal or mobile app
2. Navigate to Deposits → Recurring Deposit → Open New RD
3. Enter details:
   • Monthly deposit amount
   • Tenure (months or years)
   • Nominee details
4. Select funding account — the savings account from which monthly instalments will be debited
5. Set up auto-debit (Standing Instruction) for the monthly deposit date
6. Review and confirm — you'll receive an RD account number immediately
7. Download the RD certificate from the portal for your records

Bank-Specific Apps

• SBI: YONO app → Deposits → Recurring Deposit
• HDFC Bank: NetBanking or HDFC Mobile Banking app
• ICICI Bank: iMobile Pay app or Internet Banking
• Post Office: Visit the nearest post office (online facility limited; DOP Internet Banking available for some services)

Need to open a bank account first? Check our step-by-step guide.

Setting Up Auto-Debit for RD

Auto-debit ensures you never miss an RD instalment. Here's how to set it up:

1. During RD opening — most banks automatically create a Standing Instruction (SI) when you open the RD online
2. Manual setup — go to Standing Instructions / Auto-Pay in your net banking → create a new SI → select RD account → set amount and date
3. UPI auto-pay — some banks now support RD auto-debit via UPI mandate

What happens if you miss a payment?

• Banks charge a small penalty (typically ₹1–₹2 per ₹100 per month of default)
• If you miss multiple instalments, the bank may prematurely close the RD
• Post Office allows up to 4 defaults before the account is discontinued

Premature Withdrawal of RD

You can close your RD before maturity, but there are implications:

• Penalty: Banks typically deduct 0.5%–1% from the applicable interest rate
• Interest recalculation: Interest is recalculated at the rate applicable for the actual period the RD was held, minus the penalty
• Post Office RD: Premature closure allowed after 3 years for 5-year RD; interest is paid at the Post Office Savings Account rate for periods less than 3 years
• Partial withdrawal: Most banks do not allow partial withdrawal — you must close the entire RD
• Loan against RD: Instead of breaking the RD, consider taking a loan against it (up to 80–90% of the deposited amount)

Tax on Recurring Deposit

RD interest is fully taxable under "Income from Other Sources" in your income tax return. Here's what you need to know:

TDS (Tax Deducted at Source)

• Bank RD: TDS is deducted at 10% if total interest earned across all deposits (FD + RD) in a bank exceeds ₹40,000 per year (₹50,000 for senior citizens)
• Post Office RD: TDS applies if interest exceeds ₹40,000 per year
• No TDS if PAN is linked to your account and income is below taxable limit — submit Form 15G (or Form 15H for senior citizens) at the start of each financial year

Tax-Saving Tips

• RD deposits do not qualify for Section 80C deduction (unlike 5-year Tax Saving FD or PPF)
• If your total income is below the taxable limit, submit Form 15G/15H to avoid TDS
• Consider tax-free alternatives like PPF or Sukanya Samriddhi Yojana if tax efficiency is a priority

RD vs FD vs SIP — Which Is Better?

When to Choose RD

• You want guaranteed, risk-free returns
• You prefer monthly savings discipline over lump-sum investment
• Your investment horizon is 6 months to 5 years
• You want a simple, no-paperwork investment

When to Choose SIP Instead

• Your investment horizon is 5+ years
• You can tolerate short-term market volatility for higher long-term returns
• You want tax-efficient investing (ELSS funds)

Frequently Asked Questions (FAQ)

What is the minimum amount to open an RD account?

Most banks and the Post Office allow you to open an RD with as little as ₹100 per month. Some banks may have a higher minimum of ₹500 or ₹1,000 for online RD accounts.

Can I open an RD account without a savings account?

In most banks, you need an existing savings account to open an RD, as the monthly instalment is auto-debited from it. For Post Office RD, you need a Post Office Savings Account.

Is RD interest taxable?

Yes, interest earned on RD is fully taxable under your income tax slab. TDS is deducted at 10% if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS if your income is below the taxable limit.

Can I change the monthly deposit amount during the RD tenure?

Standard RDs do not allow changes to the monthly amount. However, some banks offer Flexi RD or Variable RD options where you can vary the deposit amount within a range.

What happens if I miss an RD instalment?

Banks charge a small penalty for missed instalments. If you miss consecutive payments (usually 3–6 months depending on the bank), the RD may be prematurely closed. Post Office allows up to 4 defaults before discontinuation.

Is RD better than FD?

Neither is universally better — it depends on your situation. Choose RD if you want to save monthly without a lump sum. Choose FD if you have idle money to invest at once. Interest rates are usually the same for both.

Can NRIs open an RD account in India?

Yes, NRIs can open an RD linked to their NRE or NRO savings account. NRE RDs offer tax-free interest in India, while NRO RD interest is taxable.

Summary

A Recurring Deposit is a safe, simple, and disciplined way to grow your savings month by month. With interest rates of 6.5%–7.5% across major banks and the Post Office, RD is perfect for short- to medium-term goals. Open an RD online in minutes, set up auto-debit, and let compounding do the rest.

For higher returns with tax benefits, also explore PPF and Sukanya Samriddhi Yojana. If you need to open a bank account first, we've got you covered.

Disclaimer: Interest rates mentioned are indicative and subject to change. Please verify the latest rates on the official bank or Post Office website before making any investment decisions.