A great way to reach your savings goal is by investing in savings schemes. If you are a salaried individual who prefers making regular deposits and earn interest on them, a recurring deposit scheme should be your go-to savings scheme.
Savings can be made easy with the help of such savings schemes. You can also consider taking help of certain online tools that can support your financial planning by telling you the amount you will be accumulating at the end of the tenure.
One such tool is a recurring deposit calculator. We’ll be learning more about it in this guide.
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15 May 2025
What is a Recurring Deposit Calculator?
A recurring deposit calculator is an investment tool that is used to calculate returns on one’s deposits. The computations are complicated because the interest is compounded every quarter and there are numerous factors involved. However, the tool makes your work easy by giving you error-free results.
Benefits of Using Recurring Deposit Calculator
Here are the benefits of using a Recurring Deposit Calculator:
- Calculations Simplified:
As previously mentioned, the interest computation is complicated to be performed manually and therefore this is where a recurring deposit calculator comes in handy. It can offer you quick results that are error-free.
- Know the Estimated Returns:
A recurring deposit calculator makes it easier to calculate the returns you would be making on your investment on its maturity.
- Financial Planning:
A Recurring deposit calculator helps an individual in planning their finances and support their future goals by calculating the returns they would be getting on their investment.
- Saves Time:
Using a recurring deposit calculator helps you save time and effort. It is easily accessible and simple to use.
- Accuracy:
The maturity amount calculated by the recurring deposit calculator is always error-free.
- Free to Use:
Using a recurring deposit calculator is free and is accessible anytime. You are free to use it for multiple calculations.
Note: Recurring Deposit Calculator does not take tax deducted at source (TDS) into account. It has to be done manually by the individual.
To collect tax from the source of revenue itself, the notion of TDS was introduced. According to this idea, a person (deductor) who is required to make a payment of a specific sort to another person (deductee) must withhold tax at the source and deposit it into the Central Government’s account.
How to Calculate Recurring Deposits?
The recurring deposit calculator measures the maturity value of the investment based on three factors. These variables vary from individual to individual as they need to be decided and entered by the people themselves.
Formula to calculate recurring deposits maturity:
A = P*(1+R/N)^(Nt)
‘A’ – maturity amount
‘P’ – recurring deposits monthly installment
‘N’ – compounding variable for interest rate
‘R’ – interest rate of recurring deposits in percentage
‘t’ – tenure of investment
The recurring deposit calculator works on the above-mentioned mathematical formula.
Here is an example to better understand how it works – Suppose an RD account holder invests Rs.3000 every month, with an interest rate of 6%, for the tenure of 1 year (4 quarters). Then by applying the standard formula for calculating recurring deposits, the maturity amount will be Rs.37,186.
If you use a recurring deposit calculator it will also show you the returns you will make on your investment.
How to Use an Online Recurring Deposit Calculator?
The recurring deposit calculator is very easy to use. Here’s how you can calculate using them online –
Step 1: Search for a recurring deposit calculator online.
Step 2: Enter your monthly instalment amount, interest rate, and tenure.
Step 3: The maturity value will be displayed on the screen.
What are Recurring Deposits?
Recurring deposits are continuing deposits or more commonly referred to as term deposits.One can customize the variables themselves. Recurring deposits are a disciplined way of investing and making regular deposits. These are especially suitable for individuals planning for their financial future.
Benefits of Recurring Deposits
Recurring deposits provide flexibility in choosing the tenure of investment, the minimum tenure can be of 6 months and the maximum of 10 years. Recurring deposits are offered by the majority of Non-Banking Financial Companies (NBFCs).
Moreover, the interest rates are somewhat fixed. But the good news is that you play a part in deciding that. When an individual opens a recurring deposit account, the tenure and investment amount chosen by them help in deciding the interest rate.
If you have a financial goal in mind that you want to accomplish in the future, investing a little sum every month can help you make it come true. You will end up sustaining a good amount of funds in the future. You can use this wealth for any of your expenses.
Types of Recurring Deposits
Recurring deposit accounts are of two types –
The first is called a Regular Recurring Deposit Account. This recurring deposit account has a predetermined tenure and a predetermined deposit sum. The deposit amount selected cannot be altered.
The second type is the Flexible Recurring Deposit. It provides you the freedom to decide how much money you want to deposit over an entire month. Although a core amount is specified, it can be adjusted. Additionally, the interest rate for such an RD account may be a little lower.
If you are looking to make a disciplined commitment to sustain future funds, a recurring deposit account is a way to go.
