A 5-year Post Office Recurring Deposit (RD) of ₹500 per month is a government-backed savings plan offering 6.7% annual interest, compounded quarterly, as notified by the Ministry of Finance. Over 60 months, you invest ₹30,000, and the total maturity amount is approximately ₹35,683, earning around ₹5,683 in interest, with safety and stable returns guaranteed.
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Generate wealthEarn 1 Cr# in maturity with Zero LTCG tax¶
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The Post Office Recurring Deposit ₹500 plan lets you deposit ₹500 every month for 5 years, totalling 60 instalments. Each deposit earns interest that is compounded quarterly, so your money earns interest on interest four times a year. As it is government-supported, your savings remain safe from market risks. Once you open the account, you commit to regular monthly deposits. Interest rate is fixed for your entire tenure, giving clear, steady and predictable growth from disciplined small savings.
How Your ₹500 Monthly Investment Grows
A recurring deposit grows through quarterly compounding. Every instalment you deposit earns interest from its deposit date until the account reaches maturity.
Estimated Return Calculation
The RD maturity works on the basis of the following formula
M = R × [(1 + i)^n − 1] ÷ [1 − (1 + i)^(-1/3)]
Terms used in RD maturity Calculator
R
Monthly deposit (₹500)
i
Quarterly interest rate (6.7% ÷ 4 = 0.01675)
n
Number of quarters (20)
Investment Outcome
Total amount invested: ₹30,000
Estimated maturity value: ₹35,683
Approximate interest earned: ₹5,683
Key Features of Post Office RD ₹500 Scheme
Before opening the account, it is helpful to understand its main features. These points give you clarity about how the scheme works and why many people prefer it.
Government Security: Your deposits are backed by the Government of India, making the scheme very secure.
Low Minimum Deposit: You can start with as little as ₹100 per month, so ₹500 is comfortably within the limit.
Fixed 5-Year Tenure: The RD runs for 60 months, creating a disciplined savings period.
Quarterly Compounding: Interest is credited every three months, allowing your savings to grow quicker than basic interest.
No Maximum Limit: There is absolutely no maximum limit on the monthly deposit amount allowed here.
Nomination Facility: You can assign a nominee who will receive the funds if something happens to you.
Transfer Facility: You can transfer your RD account between CBS-enabled post offices if you relocate.
Multiple Accounts Allowed: You can open more than one RD account if you wish to save separately for different goals.
Eligibility Criteria for Post Office RD ₹500 Account
Setting up this account is simple, as eligibility requirements are basic and inclusive.
Resident Indian Citizen: Any Indian resident aged 18 years or above can open an account individually.
Joint Account Option: Up to three adults can open a joint RD account together.
Minor Accounts: Parents or guardians can open accounts for minors. Children aged 10 years or above can open accounts in their own name with supervision.
Required Documents: Basic KYC documents such as Aadhaar card, PAN card, passport, voter ID, or driving licence are needed as proof of identity and address.
Savings Account Link: Having a Post Office Savings Account makes online management easier, although it is not always mandatory for offline opening.
How to Apply for the Post Office RD ₹500 Account
Opening a Post Office RD ₹500 account is simple, and it does not require complicated forms. You may choose the online method for convenience or the offline method by visiting your nearest Post Office.
Online Method
If you already hold a Post Office Savings Account with internet banking active, you may open the RD online by using these steps:
Log in to Portal: Log in to the official Post Office internet banking website.
Select Services: Choose the "General Services" option from the menu.
Service Requests: Click on "Service Requests."
Open RD Option: Select "Open Recurring Deposit Account."
Enter Deposit Details: Enter ₹500 as the monthly amount and choose a 5-year tenure.
Confirm Application: Review all details and submit the request for confirmation.
Offline Method
If you prefer visiting a branch, you can open the account physically:
Visit the Branch: Go to the nearest post office branch.
Collect Form: Request the Recurring Deposit (RD) application form.
Fill Details: Write your personal information and monthly deposit amount clearly.
Attach Documents: Add photocopies of your ID proof and address proof.
Submit Instalment: Hand in the completed form with the first ₹500 instalment.
Receive Passbook: Collect your RD passbook, which will record all future deposits and transactions.
Loan, Default, and Withdrawal Rules
The Post Office RD plan also provides certain facilities and rules for times when you need flexibility or miss payments. Knowing these conditions helps you manage your account wisely and avoid penalties:
Loan Against RD: After you deposit 12 monthly payments, you can borrow up to 50% of your balance as a loan. The interest for the loan is usually 2% more than your RD interest rate.
Default: If you fail any monthly payment by the due date, a fee is charged (for example, ₹1 per ₹100 unpaid amount). If you miss 4 months in a row, the account becomes discontinued, but may be revived within two months by paying dues.
Withdrawal Before Maturity: Premature closure of the RD account is permitted after completing 3 years. Partial withdrawals are not allowed. In the event of early RD closure, interest will be applied at the existing Post Office Savings Account rate rather than the RD rate.
Key Takeaways
The Post Office RD ₹500 option for five years provides a secure and straightforward way to save each month. By making monthly deposits, you receive guaranteed interest, compounded every quarter, free from market fluctuations. Suitable for both beginner and experienced savers, it ensures steady and clear growth, making it suitable for achieving short- and medium-term financial targets while maintaining safety and discipline.
Frequently Asked Questions
Is the Post Office RD ₹500 Plan safe?
Yes, the Post Office RD ₹500 Plan is backed by the Government of India, which makes it a secure savings option. Your funds and interest stay protected, giving steady returns free from market risk.
Can I increase my monthly deposit in the Post Office RD ₹500 Plan later?
You are not allowed to modify the monthly deposit amount within the same Post Office RD ₹500 Plan account. However, you may open another RD account with a deposit for higher savings.
What happens if I miss a payment?
If you miss a monthly instalment, a small penalty fee is charged on the delayed amount. Continuous defaults may deactivate the account temporarily, but you can usually revive it by paying pending dues.
Can I close the RD before 5 years?
Yes, premature closure is permitted after completing three years of deposits. However, you may receive interest at a lower rate than the regular RD return, which slightly reduces your maturity benefit.
˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
Past 10 Years' annualised returns as on 01-02-2026
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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