RD

# What is the RD Calculator, and Is It Possible To Withdraw RD Before Maturity?

Save & Invest
08-11-2023

The RD Calculator is a tool that helps you calculate the return on your investment. It tells you how much money you will have at the end of the term and how much interest you will earn.

It also calculates the total cost of your RD, including any fees or charges. You can use it to explore different scenarios, such as what happens if you invest a different amount or if rates change.

Recurring deposits offer flexibility, with the option to close the account or withdraw the funds early in the event of financial emergencies.

This blog discusses the RD calculator and whether it is possible to withdraw the RD before maturity.

## What is the RD Calculator?

### Recurring Deposit (RD)

A recurring deposit is a fixed amount of money that you deposit at regular intervals into your RD account. The interval is variable, but it is usually set to monthly or quarterly.

You can use the RD calculator to figure out how much money you will receive upon maturity.

You have to take the following things into account while calculating:

1. The initial principal amount you have deposited in your account
2. The opening date of your recurring deposit account
3. Interest rate selected for the term period
4. Most financial institutions often give a higher interest rate to senior citizens

### RD Calculator

You can calculate the maturity amount in the RD calculator that you will receive after the end of the RD period. The calculator is simple to use and provides results immediately.

### How Does the RD Calculator Function?

You can calculate the RD returns using a simple formula. However, you can get quick and accurate results with an RD Calculator.

Some of the benefits of the RD calculator are as follows:

1. You can get accurate results
2. It saves you time
3. It is convenient to use
4. You can plan your finances in the long runRD Interest Formula A = P(1+r/n) ^ nt,

Note:

A is the amount that matured at the end of the term

P denotes the principal amount

r = the annual interest rate

n = the number of times that interest has been compounded

t = the RD’s tenure

### RD Calculator

The following is a process for using the RD Calculator online:

1. Enter the amount of the monthly deposit you intend to pay.
2. Enter the duration (number of months) of your RD investment.
3. Then, enter the interest rate provided by the bank or financial institution.
4. Now, click the “Calculate” button.

## Is it possible to withdraw RD before reaching maturity age?

Yes, you can withdraw your RD amount before maturity, but you may have to pay the penalty. It is essential to make all the payments at the initially agreed-upon intervals (monthly, quarterly and so on). Even if you skip one deposit, you will have to pay a fine.

Your RD account may even be automatically closed if you miss three or more consecutive RD deposits. The principal and interest accrued on an RD are only paid to you at the end of the tenure.

### Full withdrawal of the RD amount

1. When you fully withdraw your RD amount before your maturity period, you will receive your interest that has been accrued to date. It is calculated based on the rate of interest paid. It also depends on how long the deposit has been with the bank. The institution will also charge a penalty of 1% for early withdrawals of recurring deposits.
2. If you make an early withdrawal, certain institutions will cut your interest rate by 1% to 2% till the time the RD is held in the account.Example: Your RD for RS.10,000 per month for 1 year at 8% interest starts on 09-01-22 and ends on 09-12-22. But due to some emergency, you want to withdraw on 09-07-22. In this case, you have deposited RD for 6 months, from 09-01-22 to 09-07-22. As it is an early withdrawal before maturity, you will get a penalty of reduction in the interest rate. Your interest rate will be slashed as a penalty from 8% to 6%. So you will get the RD amount for 6 months with 6% interest.
3. The normal minimum lock-in time for an RD account is three months. Before this time, if an early withdrawal was taken, the account holder would only get the original principal amount and no interest.
4. You will not be qualified for the bank’s incentives offered on the recurring deposit, apart from the penalty.

### Partially withdrawing the RD amount

1. Generally, lending institutions do not allow partial withdrawals. If you want to partially withdraw an RD, you can use a loan or overdraft facility. This is made possible by using the remaining balance in the RD account as collateral.
2. The lender will charge you a penalty of 1% for the time that the deposit has been held by the bank.Example: If you have deposited Rs 10,000 for 1 year at 8% interest but withdraw Rs. 30,000 for an emergency. For this Rs. 30,000, you would have received interest of Rs. 703. In this case, you will get a penalty of 1%, i.e., Rs. 30703*1% = Rs. 307.03.
3. While most institutions do not allow partial withdrawals, you can do so if you have been making recurring deposits at the post office for at least a year. You might think of the money that was taken out as a loan that you can repay all at once.Example: You have an RD account in the post office for Rs. 10,000 for 1 year at 8% interest. Suppose you take out a partial amount of Rs. 60,000 after one year; this amount will be considered a loan and must be repaid on time back to your RD account within the stipulated period.

## Conclusion

The RD Calculator is a valuable tool for calculating your RD investment returns. By entering the basic information regarding your recurring deposit, including the deposit amount, tenure and interest rate, you can quickly calculate the returns. It is a very handy tool for keeping track of your savings and for long-term planning.

Though you can withdraw prematurely from recurring deposits, it is best to avoid doing so to the extent possible. Only when the amount is allowed to grow until its mature period can you maximise your gains.

Piramal Finance is a reputed financial services company with attractive loan offerings, including home, personal and business loans. Do check out their blogs for more relevant content regarding finances and investments.

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