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# How To Calculate RD Interest Rate

## How To Calculate RD Interest Rate?

A = P(1+r/n)*n*t, where 'A' represents the overall amount obtained, 'r' represents the yearly interest rate, 'P' represents the principal, 't' represents the tenure and 'n' indicates the number of times interest has been compounded.

### RD Calculator

Various banks and third-party websites offer the RD Calculator, which allows you to determine the amount you will receive upon maturity. The calculator is easy to use and offers results instantly. All that is required of you is to provide some basic information, such as the duration of the investment, the amount invested, and the interest rate.

### RD Interest Rates Characteristics

The following are some of the critical characteristics of RDs:

• One may also specify the duration of the deposit, which can vary from 6 months to 10 years.
• There is no requirement to deposit a large sum. The flexibility enables you to choose the appropriate amount, which may be as little as ₹10.
• Minors may create an account under their parents' supervision under the RD plan.
• The interest rates on RDs are almost identical to those on Fixed Deposits.
• Partial and premature withdrawals are allowed in Recurring Deposits with specific additional fees.
• Senior persons are given a higher rate of interest, which is normally 0.50% greater than the general public.
• An RD account may also be utilised to get loans. The loan-to-value ratio is often between 80% and 90%.

### Premature Withdrawal

On most RD schemes, premature withdrawal is not permitted. Therefore, the RD sum may only be withdrawn at maturity. However, in the event of an emergency, the RD amount may be withdrawn before maturity by cancelling the account. As a penalty, the bank may remove 1% - 2% of the interest collected on your RD amount until the time for which the money remained with the bank.

One thing to keep in mind is that the minimum lock-in period for an RD account is three months, and if the depositor decides to withdraw before that time, they will receive no income and will only be paid the principal amount.

### Tax Exemptions

Recurring deposit plans are taxed, just as other personal investment and tax-saving instruments. A TDS of 10% is charged if the total interest received from an RD exceeds ₹10,000 in one financial year. When compared to other types of retirement savings programs, SIPs unquestionably provide more long-term value. Any SIP money invested in an ELSS beyond the first year will be exempt from taxes since profits on long-term equity investments are not subject to taxation.

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