RD Calculator: What ₹5,000/Month Becomes in 5 Years (2026)

An RD is the simplest habit in Indian savings: the same amount leaves your account every month, and the bank pays you interest on it. But ask most RD holders two questions — "what will you actually get at maturity?" and "how much of that is tax?" — and you'll get shrugs. This guide fixes that. We work out exactly what ₹5,000 a month becomes over 5 years at today's rates, show you how banks compute it, compare RD with FD, and list the five mistakes that quietly eat your returns.

Quick Answer

A recurring deposit (RD) lets you save a fixed amount every month for a chosen tenure while the bank pays interest compounded quarterly. At a representative 6.75% p.a., ₹5,000 a month for 5 years grows to about ₹3,57,300 — that's ₹3,00,000 of your money plus roughly ₹57,300 of interest. RD interest is fully taxable at your slab rate, and RDs do not get the 80C tax benefit that 5-year tax-saver FDs get. Rates in October 2026 broadly sit between 6.50% and 7.25% at major banks for 5-year tenures, with senior citizens earning about 0.50% more.

How a recurring deposit actually works

An RD is a contract with your bank: you commit to depositing a fixed sum every month for a fixed number of months — 6 months to 10 years at most banks, 5 years at the post office. On the due date each month, the money is auto-debited. Miss an instalment and most banks charge a penalty (commonly ₹1–₹2 per ₹100 of the instalment for each month of delay), and repeated misses can get the account closed. Banks compound RD interest quarterly. The standard maturity formula is: Maturity = P × [((1 + i)^n − 1) / (1 − (1 + i)^(−1/3))], where P is your monthly instalment, i is the quarterly interest rate (annual rate ÷ 4), and n is the number of quarters. You don't need to memorise this — but understanding it explains two things: why early instalments earn far more than later ones (the first ₹5,000 compounds for the full 5 years; the last one barely a month), and why a 0.25% rate difference matters more on longer tenures.

What ₹5,000 a month becomes in 5 years

At a representative 6.75% p.a. for a 5-year (60-instalment) RD: Total you deposit: ₹5,000 × 60 = ₹3,00,000. Maturity value: about ₹3,57,300. Interest earned: about ₹57,300. That interest figure is the honest answer to "is RD worth it?" — your money grows roughly 19% over five years before tax. If your bank offers 7.00% instead of 6.75%, the maturity rises to roughly ₹3,59,660 — about ₹2,360 more for that extra quarter-percent. A second example for a shorter goal — ₹10,000 a month for 3 years at 6.75%: Total you deposit: ₹10,000 × 36 = ₹3,60,000. Maturity value: about ₹3,99,810. Interest earned: about ₹39,810. The 3-year RD earns a lower interest-to-deposit ratio than the 5-year one, because your money spends less time compounding. This is why RDs reward patience — and why breaking one early is expensive.

RD interest rates in October 2026: what major banks offer

Rates move with the RBI's policy cycle, so treat these as representative bands and always check your bank's current card: Post Office RD: 6.50% p.a. for its fixed 5-year tenure (government-set, reviewed quarterly). SBI: roughly 6.50%–7.00% for general citizens across common tenures. HDFC Bank: roughly 4.50%–7.25% depending on tenure (peak rates on specific tenures like 15–18 months). ICICI Bank: roughly 4.75%–7.20% depending on tenure. Senior citizens: add about 0.50% on top at most banks. Small finance banks: can go higher, sometimes above 8% — worth comparing. Two traps: banks advertise the maximum rate in the range, which usually applies to one specific tenure bucket — your 5-year RD may earn less than the headline number. And RD rates generally mirror FD rates at the same bank for the same tenure.

RD vs FD: the same ₹3 lakh, compared

If you already have the lump sum, the FD wins on pure maths. ₹3,00,000 parked in a 5-year FD at 6.75% (quarterly compounding) matures to about ₹4,19,250 — roughly ₹1,19,250 of interest, more than double the RD's ₹57,300. That's because the FD's full ₹3 lakh works from day one, while the RD's money arrives gradually. But an RD is for money you don't have yet — salary that arrives monthly. The real choice most 25-year-olds face is "RD vs spending it," and there the RD wins every time. If you do have a lump sum and want the best of both, split it: park it in an FD and start an RD from the monthly interest.

Post Office RD vs bank RD

The post office RD: tenure fixed at 5 years; minimum deposit just ₹100 a month with no maximum; rate set by the government (currently 6.50%) and applied uniformly. Bank RDs let you pick tenures from 6 months to 10 years, usually pay slightly more on sweet-spot tenures, and integrate with your salary account for painless auto-debit. If your bank's 5-year RD rate beats 6.50%, take the bank RD; if it doesn't, the post office is the honest fallback.

Tax on RD: the part nobody tells you

Three rules: 1. Interest is fully taxable. Every rupee of RD interest is added to your income and taxed at your slab rate — no special exemption and no 80C deduction for opening an RD (unlike the 5-year tax-saver FD, which does give 80C benefit under the old regime). 2. TDS applies. If your total interest from a bank (FD + RD combined) crosses ₹40,000 in a financial year (₹50,000 for senior citizens), the bank deducts 10% TDS. Without a PAN on record, it's 20%. 3. Declare it yearly. Interest is taxable on accrual each year, not just at maturity — follow your bank's interest certificate. In the new tax regime — which most young salaried taxpayers now use — there is no 80C to claim anyway.

Five mistakes that quietly eat your RD returns

1. Missing instalments. Set the auto-debit for the day after salary credit, not the 1st. 2. Breaking the RD early for a "better" option. Premature closure typically earns the rate for the completed period minus a 1% penalty. 3. Parking emergency money in an RD. Keep 3–6 months of expenses in a savings account or liquid fund; use the RD for goals, not contingencies. 4. Ignoring the tax drag. That ₹57,300 of interest at a 20% slab leaves you about ₹45,800. Compare post-tax returns, not headline rates. 5. Opening the RD at your salary bank without comparing. A 0.50% rate gap on ₹5,000/month for 5 years is roughly ₹8,500 of free money.

This article is for educational purposes only and is not financial advice. Please consult a SEBI-registered investment adviser for personalized guidance. Investments are subject to market risk.