Financial Calculators
Recurring Deposit (RD) Calculator
The RD Calculator (recurring deposit) can help you determine the maturity value for your RD Investment Account if it grows at a set interest rate and over a certain amount of time.
RD Calculator - Recurring Deposit
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Table of contents
As the name implies, recurring deposits (or RD accounts) allow you to make incremental deposits and earn a risk-free return at the end. Seriously, if your goal is to save money for a house, consider a biweekly loan. This mortgage schedule allows you to pay little by little and help you reach your goal quicker.
What is a Recurring Deposit? What is RD?
A recurring deposit (RD), is a long-term investment in which you can make regular savings and earn a fixed rate of interest over the period. The deposits are monthly and interest compounds every quarter. Earning individuals can enjoy a fixed interest rate on savings with a recurring deposit account. This is similar to the fixed deposit (FD) investment. A recurring deposit offers flexibility over FD investments because you have the ability to choose how many deposits you would like to make as well as the minimum monthly amount.
You can automate your monthly savings account payments by issuing a standing or automated payment. You can also deposit more money than you have set up in your account at any time. You can save more money and get more returns on your investment at your own speed.
Due to its flexibility, interest rates are very competitive. The term of the RD and the market trends can affect the interest rates. They can range from 5% to 8%. The interest rate will be higher if the term is longer.
To receive the full benefit of compounding interests, you need to make your monthly payments on time. You will lose the initial maturity value if any payments are missed or delayed by the bank.
If you are looking for the best deal on a recurring deposit account then make sure you choose a bank:
Premature withdrawals are subject to a small fee
This plan offers a high-interest rate for the shortest term.
The monthly income scheme is another safe investment option that can provide steady income.
How do I use the RD calculator?
Once you know what RD is, the RD calculator makes it easy to use. It requires only three parameters and can be used in very short steps.
In the Monthly Deposit field, enter the amount that you would like to deposit each month.
Give the RD term, usually between 6 and 10 years.
You will receive the interest rate for the RD account that the bank or financial institution offers and voila! Instantly you will receive your results.
Benefits and limitations of RD
Benefits:
RD is a great investment vehicle because of the following:
RD is a risk-free, predictable, and stable investment method that is more flexible than a fixed deposit.
Without making an upfront deposit, you can earn interest at a fixed deposit rate without having to make a large deposit.
RD is easy to set up and convenient, especially if your regular savings account is with a financial institution.
RD accounts offer a higher rate of interest than regular savings accounts.
RD encourages investors to save money, particularly for salary earners who have multiple financial goals.
Low-income earners can maintain an RD account by depositing a minimum amount each month.
To earn more, you can make additional monthly contributions that are greater than the minimum amount.
Automate your contributions by sending standing orders to the bank or using a post-dated check.
A recurring deposit is a deposit that has a fixed rate of interest and whose maturity value is guaranteed when you make regular deposits.
Senior citizens may be eligible for preferential interest rates from some financial institutions.
Loans can be taken against the RD amount.
In an emergency, premature withdrawals can be made.
You will still be eligible for interest for the deposit period if you initiate premature RD closing.
If you are looking to achieve short-term financial goals, a recurring deposit is a best and most secure way to invest.
A minor can save money by setting up an RD. They also get good interest in their savings.
Limitations:
If you withdraw before your RD matures, you'll pay a penalty and earn less interest.
Your earnings are subject to tax, which can reduce your return.
Banks cannot allow partial withdrawals of the RD amount.
If you wish to contribute more, your deposit must be at least twice the minimum deposit amount.
You must repay the loan as a lump sum if you take a loan to your RD.
An FD earns you more interest over RD over the long-term because interest accrues starting from the first month.
What is the difference between fixed deposits and recurring deposits?
A recurring deposit allows you to invest small amounts each month at a fixed term and interest rate, while a fixed deposit account lets you invest a lump amount at the same fixed interest rate.
What is the RD interest rate calculated?
Calculating RD interest involves first finding the simple interest in the monthly RD deposits and then adding all accrued interest at the end.
Article author
Parmis Kazemi
Parmis is a content creator who has a passion for writing and creating new things. She is also highly interested in tech and enjoys learning new things.
Recurring Deposit (RD) Calculator English
Published: Tue Jun 14 2022
In category Financial calculators
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