What is an RD Calculator and How to Use It?

Save & Invest

Deciding whether to invest in recurring deposits (RD) or not? Afraid of the potential risks of a market crash? Want to invest but lack the correct knowledge about investments? Want to know how to calculate your interest using an RD calculator? Well, to get all these answers regarding RD calculators and investments, stick with this article. 

This article will discuss RD, its features and benefits. RD interest calculator, how to use it, why to use it, and how it works.

What does RD mean? 

Well, RD is an investment option where you deposit money regularly at a given interest rate for a set period of time in return for interest. It is a very popular scheme often opted for by investors, senior citizens, and even teenagers. 

A recurrent deposit is very similar to a fixed deposit, but the only significant difference is the investment frequency. In an FD, you invest only once for a fixed period of time, and you get your return at the end of your maturity. In a recurrent deposit, on the other hand, you invest on a monthly basis until the end of your investment period and get a return. 

Sometimes, there is a problematic factor associated with recurring deposits. RDs are subject to a TDS of 10% (tax deducted at source), which means 10% of your earned interest will be deducted as a form of tax. 

What are the benefits of investing in RD? 

Investing in RD could be a very profitable option, as it gives you high-interest returns. Here are some of the benefits:

  • High rate of interest

Unlike a fixed deposit or a public provident fund, the rate of interest on a recurrent deposit is quite high. You can use an RD interest calculator to estimate the interest you get from your investment. 

  • Minimal lock-in period

RD comes with a very short lock-in period, which is about a month to 3 months. That means just after this period, you can withdraw money whenever you want without affecting the interest. However, if you choose to withdraw money within the lock-in period, then you will not get any interest.

  • Multiple accounts

There is no restriction on how many RD accounts one person can open. You can open multiple RD accounts to meet your financial goals, which is a huge advantage. 

  • Helps you in saving

It makes you more conscious regarding financial aspects as you start saving more often to invest in an RD account rather than wasting that money. 

  • Flexible investment

You do not have to invest a huge amount of money every month; rather, you can invest as little as Rs 100 every month. 

  • Hassle-free

You don’t need to worry much while opening your RD account because there isn’t much to be processed. Especially if you have a savings account, opening an RD account will be a walk in the park. 

To manage all these investment updates, you need to use an RD calculator to find your interest rates. 

What is an RD calculator? 

It is a tool to calculate the interest amount on the money that you invest in your RD account periodically. It is an AI-powered model that is programmed for such calculations. 

A recurring deposit, as the name suggests, is repeating in nature, which means you have to invest a certain amount continuously. To keep track of all these updates, you need an RD interest calculator to help you out with your estimates.

How to use an RD calculator? 

An RD calculator is based on a simple formula, 

           F = P*(1+R/N)^Nt

Where F is your future interest amount, P is your principal amount, which you keep investing every month, R is your interest rate, and n is the compounding frequency, which is usually 4 because compounding frequency is calculated quarterly. 

Let us take an example to understand the RD formula better. 

Suppose, you invest Rs 2,500 every month at an interest rate of 6.5 percent for 5 years. Using the above formula, your interest amount will be equal to Rs 1,77,481. 

Now, the formula might seem a bit difficult, which is why you should use a ready-made RD interest calculator to find your future interest. 

Here are the steps to using an RD interest calculator:

  1. Enter the principal amount in the bar, which you invest on a monthly basis. 
  1. Enter the rate of interest in the required bar of the RD interest calculator
  1. Enter the time period up to which you will be investing your money. 
  1. Click on the ‘Calculate’ option with the numbers that are already submitted, and you will have your results in front of you. 

Why should you use an RD interest calculator? 

Frankly, the reasons to use an RD calculator are many:

  • It helps you plan your investment future and make it better over time.
  • It gives you clarity on what to expect from the amount of money that you regularly invest. 
  • An RD investment calculator is a very convenient tool and is user-friendly as well. 
  • It saves you a lot of time, which you can now use to make informed decisions regarding your future investment. 
  • It gives you error-free and accurate results as it is generated by AI software. 


To invest and grow in a competitive financial world is no easy task, and to track the progress of your RD account, you have to use an RD interest calculator. This will keep you updated about market dynamics and the nature of returns. 

If you are interested in reading more articles like these, you should check out Piramal Finance. They have many informative articles regarding finance, personal loans, SIPs, mutual funds, fixed deposits, RDs, and many more.