Post Office FD and RD explained
Post Office savings schemes are government-backed deposits that prioritise safety and certainty over high returns. Two of the most popular are the Time Deposit (a fixed deposit / FD) and the Recurring Deposit (RD). Both compound quarterly, but they suit different savers: the FD is for a sum you have now, the RD for building savings from a monthly habit.
This calculator handles both — switch the scheme to match what you are planning.
The formulas
Time Deposit (FD) — a single deposit compounding quarterly:
Maturity = P × (1 + r/4)^(4 × t)
where P is the deposit, r is the annual rate as a decimal, and t is the term in years.
Recurring Deposit (RD) — a monthly deposit growing with compounding. Because money goes in every month and interest compounds quarterly, the maturity is built up instalment by instalment; this tool computes it month-by-month for a close, transparent estimate.
Worked example
FD example: deposit ₹5,00,000 for 5 years at 7.0%.
- Quarterly rate = 7 ÷ 400 = 0.0175; periods = 20
- Maturity = 5,00,000 × (1.0175)²⁰ ≈ ₹7,07,000
- Interest earned ≈ ₹2,07,000
RD example: deposit ₹5,000 a month for 5 years at 7.0%.
- Total deposited = 5,000 × 60 = ₹3,00,000
- With monthly contributions compounding, maturity ≈ ₹3.58 lakh
- Interest earned ≈ ₹58,000
The FD puts a large sum to work immediately, so it earns more interest than the RD even though both run five years — the RD's money arrives gradually and so compounds for less time on average.
How to choose
- Have a lump sum? A Time Deposit usually earns more, and the 5-year version is 80C-eligible.
- Saving from monthly income? An RD enforces discipline and is ideal for short-to-medium goals.
- Compare with PPF/SSY for tax-free alternatives — see the PPF calculator and Sukanya Samriddhi calculator. Post Office FD/RD interest is taxable, which matters at higher slabs.
Post Office RD interest is officially compounded quarterly; the RD figure here is a close month-by-month approximation for planning.