Recurring Deposits Explained: Turning Monthly Saving Into a Maturity Value
A recurring deposit turns a monthly habit into a lump sum at maturity. This guide explains how the interest is estimated.
What is the Recurring Deposit Calculator?
This calculator estimates a recurring deposit, where the same amount is deposited every month for a fixed term. It uses the standard simple-interest approximation for such deposits: interest = monthly deposit times n times (n + 1) divided by 2, times the annual rate divided by 1,200, where n is the number of months. The maturity value is the total deposits plus this interest.
How to use it
- Enter the amount you will deposit every month.
- Enter the annual interest rate and the term in months.
- Press Calculate to see the maturity value, total deposits and interest earned.
Worked example
Deposit 1,000 a month at 6% per year for 12 months. The tool gives a maturity value of 12,390, total deposits of 12,000 and interest of 390.
How is recurring deposit interest calculated?
Each monthly deposit earns interest for a different number of months, so the standard method adds up those periods with a simple formula. In plain terms, interest equals the monthly amount times the number of months times the number of months plus one, divided by two, times the annual rate divided by 1,200. Add that interest to all your deposits to get the maturity value.
Frequently asked questions
Why is this called an approximation?
A recurring deposit pays interest on each monthly deposit for a different length of time, and the standard formula summarises that with a simple-interest approximation. Actual bank calculations may differ slightly by their own rules.
What happens if I miss a deposit?
Missing deposits reduces both the total deposited and the interest, because that month's money earns nothing. This calculator assumes every monthly deposit is made on time.