Why the interest looks low
A recurring deposit is the one savings product people routinely feel cheated by, and the arithmetic is the reason. Your last instalment earns about one month of interest, the one before it two months, and so on. Averaged over the term, only about half your money has been in the account earning anything.
That is not a bad deal, it is simply a different one from a fixed deposit. Comparing the interest figures directly is the mistake; comparing the rates is the fair test, and they are usually within a fraction of a point of each other at the same bank.
The compounding basis matters more than it looks
Recurring deposits on rupee accounts are compounded quarterly, so an instalment paid in the second month of a quarter compounds for a fraction of that quarter. This calculator uses exactly the summation banks quote rather than a simplified monthly formula, which is why its figures match a bank's own maturity advice rather than sitting a few hundred above it.
Frequently asked questions
- How is a recurring deposit maturity amount calculated?
- Each instalment earns interest only for the time it is actually in the account, compounded quarterly. The maturity amount is the sum of every instalment grown for its own remaining months, which is why the first instalment earns nearly a full term of interest and the last earns about a month's.
- Why is the interest so much less than on a fixed deposit of the same total?
- Because the money is not all there for the whole term. Paying 5,000 a month for two years means an average balance of a little over half the 120,000 total, so the interest is roughly half what the same 120,000 would earn as a single deposit for the same period.
- How is a recurring deposit different from a SIP?
- The rate. A recurring deposit pays a rate the bank has contractually agreed; a SIP is invested in a market and the return is whatever the market gives, including a negative one. The arithmetic looks similar and the certainty does not.
- What happens if I miss an instalment?
- Most banks charge a small penalty per missed instalment and may close the account after several. That is a contract term rather than a rule, so it is not modelled here - this assumes every instalment is paid on time.
- How accurate is this?
- The arithmetic is exact and uses decimal rather than floating-point maths, so results are not skewed by rounding. Where a calculation depends on legislation, the page shows which rule year it used, when those rules were last checked and the official source they came from. Results are estimates for information, not advice.
- Are my figures sent anywhere?
- No. Every calculation runs inside your browser. Nothing you type - salary, income, dates or amounts - is sent to our servers, stored or logged. You can disconnect from the network after the page loads and the calculator keeps working.