How is RD interest compounded?▾
Indian banks and the post office compound recurring deposit interest quarterly. Each instalment earns interest only for the months it stays in the account.
RD or SIP — which is better?▾
An RD gives a guaranteed return with no market risk; a SIP in equity funds can earn more over long periods but can also fall. Many people use RDs for goals under 3 years.
What happens if I miss an RD instalment?▾
Banks charge a small penalty per missed instalment, and several missed instalments can lead to premature closure.
Is RD interest taxable?▾
Yes, RD interest is taxed at your slab rate and TDS applies above the annual threshold, just like FDs.
