5 years RD Interest Rate

Thinking long term? A 5-year Recurring Deposit can help you build wealth steadily—month by month.
RD Interest Rates
OPEN FD
3 min
20-May-2024 

Planning for your child's school fees? A future holiday? Or just want to build better saving habits?

A 5-year Recurring Deposit (RD) can help you grow your money, one small step at a time—with zero risk and steady interest.

While it may not promise the highest returns, it gives you something just as valuable: discipline, safety, and predictability.

You can also consider a similar, safe investment option like “Fixed Deposit” to grow your savings. Bajaj Finance offers interest rates of up to 8.60% p.a. on FDs. Check FD Rates now!

What is a 5-Year RD—and Why It’s Popular

Think of an RD as a monthly piggy bank with interest. You set aside a fixed amount every month, and after 5 years, you get your savings plus the interest earned. No market ups and downs. No guesswork.

The 5-year RD is especially popular with people who:

  • Want to lock in current interest rates

  • Have medium-term goals like buying a two-wheeler, or home appliance, or paying for a course

  • Can’t invest a lump sum right now but still want long-term returns

As of early 2024, India Post is offering 6.70% p.a. on its 5-year RD—backed by the government.

RD vs FD: RDs are great if you want to start small and save monthly. But if you already have a lump sum ready, FDs may offer higher returns. Open a Bajaj Finance FD Account online in minutes and get interest of up to 8.60% p.a.

Snapshot: 5-Year RD Interest & Features

Feature

Details

5-Year Post Office RD Interest Rate

6.70% p.a.

Other RD rates (banks/NBFCs)

2.5% – 8.5% p.a.

Minimum deposit

Rs. 100/month

Tenure

6 months to 10 years

Compounding frequency

Quarterly

Premature withdrawal

Allowed after 3 months (with penalty)

Part-withdrawal

Not allowed


Tip: Want to build a Rs. 3 lakh fund in 5 years? Use our free RD calculator to plan how much you need to deposit monthly.

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Special tenure of 18, 22, 33, 42 and 44 months offered for higher returns
  5. Up to 0.40% p.a. extra interest offered for senior citizens
  6. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

By proceeding, you agree to our Terms and Conditions

Types of RD accounts you can open

Not all RDs are one-size-fits-all. Depending on your life stage and goals, here are the most common RD types you will find:

1. Regular RD

Ideal for salaried individuals or first-time savers. You pick the amount, the bank deducts it monthly, and your money grows quietly in the background.

2. Junior RD

Offered by some banks to help parents save for children’s education or milestones. You can open one in your child’s name with your help.

3. Senior Citizen RD

Designed for post-retirement peace of mind, senior citizen RDs offer 0.25% to 0.5% extra interest, depending on the bank.

You may better returns through senior citizen FDs, Bajaj Finance is offering extra interest of up to 0.40% p.a. to senior citizens. Explore FD rates now!

4. NRE/NRO RD

If you are an NRI, these RDs help you park your foreign income in India. Just remember: the rates may be lower, and the rules differ from regular accounts.

What are the benefits of a 5-Year RD?

A 5-year Recurring Deposit is not just about saving money—it is about building a habit and securing peace of mind. Here is why many people prefer this option:

1. Safe, Fixed Returns

Unlike stocks or mutual funds, your RD interest is locked in. You know exactly how much you will get at the end of 5 years—no surprises, no volatility.

2. Ideal for Goal-Based Saving

Want to buy a new scooter, fund a wedding expense, or build a Rs. 2–3 lakh corpus for emergencies? RDs help you reach those mid-sized goals without straining your monthly budget.

FD Tip: If you have a lump-sum amount (say from a bonus or maturity payout), why don’t you invest it in a Fixed Deposit for higher returns? Check Today’s FD Rates and start earning interest rates of up to 8.60% p.a.

3. Discipline Without Pressure

Your monthly deposit is auto-debited—so you stay consistent without effort. Even as low as Rs. 500/month adds up to something meaningful in 5 years.

4. Loan Facility Against RD

Need quick cash but don’t want to break your RD? Some banks let you borrow against your RD, keeping your goal intact while managing short-term needs.

Fixed deposit variants

Highest Credit Ratings | Trusted with over 1.4 million Deposits | Assured Returns on FD
New Product

FD Max

INTEREST RATES UP TO
8.60% p.a.
Invest Online

Digital FD Only on App/Web

INTEREST RATES UP TO
8.60% p.a.
Invest Online

42 months

INTEREST RATES UP TO
8.60% p.a.
Open FD

FD - Age below 60

INTEREST RATES UP TO
8.35% p.a.
Open FD

FD - Senior Citizen

INTEREST RATES UP TO
8.60% p.a.
Open FD

FD – Special Tenure

INTEREST RATES UP TO
8.60% p.a.
Open FD

What affects your RD interest rate?

RD interest rates are not one-size-fits-all. Here is what impacts how much you earn:

1. Bank or Institution Type

Private banks, public banks, post office, or NBFCs like Bajaj Finance—all offer different rates based on market conditions and internal policies.

2. Your Tenure

Typically, longer tenures = higher interest. A 5-year RD will usually offer better returns than a 1-year RD.

3. Customer Type

Some banks offer higher rates for:

  • Senior citizens (0.25% to 0.5% extra)

  • Women account holders

  • Existing or salary account customers

Planning to invest in an RD? Do you know you can get better returns with an FD?

With Bajaj Finance FD, you could earn up to 8.60% p.a. Open an FD in a few minutes!

Eligibility & Documents for opening an RD

Who can open an RD?

Almost anyone—whether you're salaried, self-employed, a homemaker, a student, or a senior citizen.

Required Documents:

  • Aadhar card or any government-issued ID

  • PAN card (for deposits above Rs. 50,000)

  • Passport-size photo (for offline mode)

  • Bank account details (for linking auto-debit)

For online RD through net banking or mobile apps, your bank may not ask for fresh documents if you are already KYC-verified.

Quick Tip: You’ll need the same documents for starting a Fixed Deposit! Bajaj Finance provides interest of up to 8.60% p.a. on FDs, click here and open an FD now!

How is the interest under the recurring deposit scheme calculated?

The formula to calculate interest on recurring deposits is as follows:

M = R [(1+i) n – 1]/ 1 – (1+i) -1/3

Where:

M = maturity value

R = monthly instalment

n = number of quarters

i = rate of interest/400

Taxation on RD: What you need to know

RDs may feel low-risk, but they are not tax-free. The interest you earn is treated as “Income from Other Sources” and taxed as per your income slab.

TDS Deduction:

  • Banks deduct TDS at 10% if your annual interest crosses Rs. 40,000 (Rs. 50,000 for senior citizens).

  • If your income is below the taxable limit, you can submit Form 15G/15H to avoid TDS.

Pro tip

Bajaj Finance launches a new variant, "FD Max", for investments upto Rs. 25,000 . Bajaj Finance is providing one of the highest interest rates of up to 8.60% p.a.for senior citizens and 8.35% p.a. for non-senior citizens , in this variant.

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Can you break an RD mid-way?

Life happens—and sometimes, you may need funds before maturity. Here is what you should know:

  • Premature withdrawal is allowed in most cases, but you will face:

    • A penalty on interest earned

    • Possible reduction in overall returns

  • Some banks may restrict withdrawal for a few months

Planning for short-term needs? Consider a 1-year Bajaj Finance FD instead of locking into a 5-year RD. Check FD rates.

RD vs FD: Which is better for you?

While both are safe savings options, they serve different goals. Here’s a quick comparison:

Feature

Recurring Deposit (RD)

Fixed Deposit (FD)

Deposit type

Monthly contributions

One-time lump sum

Best for

Building a savings habit

Investing a bonus, inheritance, etc.

Interest payout

On maturity

Monthly, quarterly, or on maturity

Returns

Usually lower than FDs

Often slightly higher

 

Calculate your expected investment returns with the help of our investment calculators

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.