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At the post office, the RD interest rate for October to December stands at 6.7%, on a five year account where interest compounds quarterly, while bank RD interest rates are set by each bank and usually match its fixed deposit rate for the same term. Whichever you open, the rate on the day of opening normally stays fixed until the account matures.
So a later cut in rates does not reduce an RD you already hold, and a later rise does not lift it either. Read on for how each rate is decided, what the senior citizen extra looks like, and how much interest 1,000 or 5,000 rupees paid in monthly will earn.
At a glance
Post office RD
6.7% a year, 5 year termWho sets it
Government for the post office; each bank for its own RDCompounding
Every quarterSenior citizens
Banks often add a small extra; the post office does notTax
Interest is taxable; banks deduct TDS above the limitRate lock
Rate at opening applies for the whole term
This quarter's rd interest rate at the post office
The Ministry of Finance reviews small savings rates every three months. For October to December, the post office recurring deposit earns 6.7% a year. Interest is compounded quarterly and paid with the balance at maturity after 60 instalments. The rate in force when you open the account holds for all five years.
The minimum instalment is 100 rupees a month, then any amount in multiples of 10 rupees, with no upper limit. More on opening, loans and default fees is on the post office RD page.
Bank RD interest rates: how they are fixed
Banks fix RD rates themselves. In most banks the RD rate for a term equals the FD rate for that same term, because an RD is treated as a series of small deposits. Rates are listed by tenure, for example 6 months, 1 year, 2 years, 3 years and 5 years.
- Large public sector banks usually sit at the lower end of the range.
- Private sector banks often pay a little more for some terms.
- Small finance banks commonly pay the most, and they carry the same DICGC insurance as other scheduled banks.
Rates move with the RBI repo rate and with how much each bank wants deposits. For a fuller picture of who pays more and why, see where the top deposit rates are found.
Senior citizen RD interest rate
Most banks give depositors aged 60 and above an extra margin on RDs, the same one they give on FDs, often around a quarter to half a percent. Some also add a little more for those above 80. The post office RD pays everyone the same rate; retired savers who want a higher government rate usually compare it with SCSS. The bank side is covered in the senior citizen deposit rate guide.
5000 ki RD me kitna interest milta hai: rupee examples
| Monthly instalment | Term | Paid in | Approximate interest |
|---|---|---|---|
| 1,000 at the post office | 5 years | 60,000 | about 11,300 |
| 5,000 at the post office | 5 years | 3,00,000 | about 56,000 |
| 5,000 in a bank at an example 7 percent | 3 years | 1,80,000 | about 20,700 |
Post office figures use the current rate of 6.7%. The bank line uses 7 percent only to show the scale; your bank's rate may be higher or lower. Try your own numbers in the RD calculator.
Is RD interest taxable
Yes. RD earnings fall under the head income from other sources, taxed at your slab rate in both the old and new regimes. There is no special exemption for RDs.
A bank cuts TDS from RD earnings when your total interest from all deposits at that bank in a year goes above the limit, which is currently 50,000 rupees for most people and 1 lakh rupees for senior citizens. When your total income is too low to be taxed, hand the bank the self declaration form so TDS is not cut. The full rules are explained on the deposit interest tax page.
Things that lower the rate you actually get
- Closing early: a bank pays its rate for the shorter run, then trims a penalty. A post office RD shut after three years earns only the savings bank rate.
- Missed instalments: late fees are charged, and the post office account is discontinued once four instalments in a row are skipped, unless it is revived within two months.
- Choosing an odd term: if the bank's best rate is for a special period, a nearby term may pay less.
RD rates compared with other monthly savings
Before choosing, look at what else takes small monthly amounts. A PPF account pays 7.1% tax free but locks money for 15 years. A Sukanya Samriddhi account pays 8.2% for a daughter under 10. An RD is shorter and more flexible but fully taxed. What matters most is how soon you will need the money.
Frequently asked questions
What is the current RD interest rate at the post office?
It is 6.7% a year for October to December, on a 5 year account with quarterly compounding. The government revises it each quarter.
Do bank RD rates differ from FD rates?
In most banks they are the same for the same term. A few banks run separate RD cards, so check the bank's page.
Does my RD rate change if rates fall later?
No. Your opening date freezes the rate right up to maturity, both at banks and at the post office.
Is RD interest taxable for senior citizens?
Yes, but the TDS limit is higher at 1 lakh rupees a year per bank, and seniors with no taxable income can submit a declaration to stop TDS.
Which bank has the best RD interest rate?
We do not list bank names. Small finance banks often have the highest RD rates; compare the current rate cards of a few banks for your term.
Official sources
- India Postwww.indiapost.gov.in
- Department of Economic Affairs: small savings ratesdea.gov.in
- Reserve Bank of Indiawww.rbi.org.in
Rules, amounts and portals can change. Check the official source before you apply or deposit.