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What is an RD (Recurring Deposit)?

A recurring deposit is a financial product typically offered by banks and post offices where an individual deposits a fixed amount every month for a predetermined tenure. Unlike a lump-sum deposit, where you invest a single sum at the start, an RD requires periodic deposits (usually monthly).

How to use an online RD calculator — a step-by-step approach?

Using an online RD calculator is straightforward, but to extract the most value, follow a simple method: First, define the goal.

When to prefer an RD over other instruments?

Recurring deposits suit a particular profile: You prefer predictable, guaranteed returns. You need a disciplined monthly savings vehicle. You are risk-averse and want to avoid market volatility. You have a medium-term goal (often 6 months to 5 years). You want to stagger contributions but still earn compounded interest. If these match your situation, an RD — and an RD calculator to plan it — is a logical choice.

What to watch for in terms and conditions?

Before opening an RD, read the small print: Confirm compounding frequency (monthly or quarterly) and the bank’s rounding policy. Understand penalty rates for missed or delayed deposits. Check rules related to premature closure and breakage charges — often the interest rate may be reduced to the prevailing rate applicable for the actual period or a penalty may be levied.