Recurring Deposit Calculator

Why each instalment earns differently

Your first deposit sits for the whole term. Your last deposit sits for a single month. A recurring deposit is therefore a series of separate fixed deposits with staggered start dates, and the maturity value is the sum of all of them compounded individually.

This is why the effective return on an RD is always lower than the headline rate suggests. If you deposit AED 1,000 a month for twelve months at 5%, you have not invested AED 12,000 for a year — on average you have invested it for about half that.

Compounding frequency matters

Most banks compound recurring deposits quarterly. Monthly compounding produces a slightly higher maturity value at the same nominal rate. When comparing products, check the compounding basis as well as the advertised rate.

Early withdrawal

Breaking a recurring deposit before maturity usually triggers a penalty, commonly one percentage point off the applicable rate, and interest may be recalculated at the rate for the period actually completed rather than the contracted rate.

Frequently asked questions

How is recurring deposit interest calculated?

Each monthly instalment is compounded separately for the time it remains invested. The maturity value is the sum of all instalments compounded individually, which is why it is lower than applying the rate to the full deposited amount.

Is RD interest compounded monthly or quarterly?

Most banks compound quarterly. Some products offer monthly compounding, which produces a marginally higher maturity value at the same nominal rate.

What happens if I withdraw early?

Most banks apply a penalty, typically reducing the applicable rate by around one percentage point, and recalculate interest for the period actually completed.

Is a recurring deposit better than a fixed deposit?

A fixed deposit invests the whole sum immediately and therefore earns more on the same amount. A recurring deposit suits people saving from monthly income who do not have a lump sum to place.