Can I withdraw RD before maturity?

Yes, but with a penalty (usually 1% lower interest rate). Some banks allow partial withdrawal after 6 months.

No, RD interest is taxable at your slab rate. TDS is deducted if interest exceeds ₹40,000/year (₹50,000 for seniors).

What if I miss an RD installment?

Most banks charge a small penalty (₹1-2 per ₹100 per month). If you miss 3+ consecutive installments, the RD may be prematurely closed.

What Is a Recurring Deposit (RD)?

A Recurring Deposit allows you to invest a fixed amount every month and earn interest like a Fixed Deposit. It's ideal for building savings with small monthly contributions.

How RD Works

You deposit a fixed amount (minimum ₹100-₹500) every month for a chosen tenure (6 months to 10 years). Interest is compounded quarterly. At maturity, you receive principal + accumulated interest.

RD Interest Calculation

RD interest is calculated quarterly using compound interest. Since each installment earns interest for a different duration, the effective return is slightly less than a same-tenure FD. For example, a 12-month RD at 7% gives an effective yield of about 6.5%.

RD vs FD vs SIP

RD: Guaranteed returns, monthly deposits, low risk. FD: Higher returns (lump sum advantage), guaranteed. SIP: Market-linked, potentially higher returns, higher risk. RD is best for risk-averse savers with monthly income.