Important questions about Recurring Deposit are how RD (Recurring Deposit) works, how RD interest is calculated, how to use Recurring Deposit Interest Calculator, how to open recurring deposit online, what is the compounding frequency in RD, what is the minimum amount you can start RD, what is the minimum period (tenure) for which you can invest your money in RD, how to calculate recurring deposit maturity amount and similar questions.
RD Calculator in Excel help you to calculate interest in RD (Recurring Deposits). RD or Recurring Deposit is one the popular saving options in India that will help you to accumulate some predefined amount with the help of regular savings in Recurring Deposit. You can easily open RD in your bank using Internet banking or in post office. RD is usually done to achieve short term goals with no risk involved. The maturity amount in RD is guaranteed hence there is no risk. Recurring Deposit Interest Calculator will help you to know the interest you’ll get in Recurring Deposit.
Compounding frequency is QUARTERLY in most of the banks but it depends on bank to bank. Interest rates in RD can range between 3.5% to 6% annually. The period or tenure ranges between 6 months to 10 years. You can easily use RD interest calculator to calculate your maturity amount in RD based on amount, interest rate and period you select.
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You can also use this online RD Calculator to calculate interest in recurring deposits quickly.
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- Recurring Deposit Calculator Video using excel
- What is Recurring Deposit
- How RD works
- Recurring Deposit Interest Rates
- How to Open Recurring Deposit Account
- Recurring Deposit Interest Calculation
- Frequently Asked Questions (FAQs)
Recurring Deposit Calculator Video using excel
What is Recurring Deposit
- RD also called as Recurring Deposit is the type of account you open considering a goal in mind which are usually short term – 6 months to 2 years
- You regularly deposit in your recurring deposit account for a predefined period and accumulate sufficient amount to reach your goal
- While you deposit your money in recurring deposit, you get interest amounts based on the interest rate that is set during recurring deposit account opening
- The goals for opening an RD can be to pay for the next insurance premium, buying a new phone, etc.
- So instead of paying EMIs on such goals, you open recurring deposit account as a part of planning for your goal
- In this way, you accumulate sufficient amount to achieve the goal rather than buying things and paying later
- Another advantage of opening recurring deposit is that you earn additional interest instead of paying this additional interest which happens in paying the EMIs (in case your convert the buying amount to EMIs)
- The calculation of recurring deposit interest is similar to that of Fixed Deposit Interest Calculation. Compounding is done on quarterly basis in most of the banks
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How RD works
- As mentioned above, you deposit pre defined amount every month and accumulate the required amount to be achieved as your maturity amount in recurring deposit
- The maturity amount is the sum of all your deposits over the period of time and the additional interest you have earned
- In the process of interest calculation, compounding is done quarterly in which case, the already earned interest will earn you more interest in next quarters
- The interest is calculated on monthly basis based on the monthly interest rate derived from the annual interest rate, and this interest is than added to your balance every quarter. This is how compounding works in recurring deposit
Recurring Deposit Interest Rates
- Recurring Deposit interest rates ranges between 3.5% to 6% annually from bank to bank
- Interest rate also depends on the tenure you select
- For short periods (6 months to 12 months) – Interest rates are less, compared to the Interest rates for longer periods (1 year to 10 years)
- For senior citizens, interest rates are high by 0.25% to 0.5% compared to non senior citizens
- Getting good interest rates is another factor while opening a recurring deposit
- But more than thinking about recurring deposit interest rates, your aim should be to achieve the goal for which you open recurring deposit
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How to Open Recurring Deposit Account
- You can easily open recurring deposit offline or online
- For offline mode, if you already have a bank account, you can open recurring deposit in that bank itself and give standing instructions to debit your account on a particular date with specific period
- You will be provided with hardcopy of recurring deposit certificate or a passbook
- For online mode, you can easily open recurring deposit via internet banking provided by the bank
- Popular banks such as SBI, HDFC, ICICI, Axis, etc. provide you this facility to open recurring deposit online via internet banking
Recurring Deposit Interest Calculation
As mentioned above, recurring deposit maturity amount is the sum of all your deposits and the additional interest amounts you earn
Deposit = Rs. 2000
Interest rate = 5%
Tenure = 1 year
Below is the recurring deposit maturity amount:
As seen above, maturity amount for above example is Rs. 24,657
Few points to consider
- Interest rate was divided to monthly interest rate to calculate monthly interest on recurring deposit
- Compounding is done after every 3 months
- Entire Interest amount is added to the total principal amount to calculate recurring deposit maturity amount
So you can easily calculate recurring deposit interest using the RD calculator in excel provided at the start of this post.
The excel formula for RD is very simple – monthly interest rate * balance / 100. This helps you remember the way in which RD interest can be easily calculated as compared to the complex formula in excel.
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Frequently Asked Questions (FAQs)
How recurring deposit interest is calculated?
Recurring Deposit interest is calculated on monthly basis using monthly interest rate and is compounded on quarterly basis.
How many recurring deposit can be opened?
You can open any number of recurring deposits. There is no limit on number of recurring deposit to be opened against your name.
How to open recurring deposit online?
Ans. You can easily open recurring deposit online with the help of internet banking of the bank in which you have account.
How to calculate recurring deposit maturity amount?
As mentioned above, recurring deposit maturity amount is the sum of all the deposits you have made, plus the additional interest amounts you earn every quarter. You can use above mentioned recurring deposit interest calculator using excel to calculate interest on your recurring deposit and plan accordingly.
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