If you ever wanted to make a saving with your money invested in the bank, then now may be the time to do so. Recurring Deposit is a financial saving scheme offered by banks and other financial institutions where you can save the money deposited in the bank by making monthly deposits or a lump sum of cash for a fixed period of time.
Tenure of Recurring Deposit
Recurring Deposit is a financial saving scheme offered by banks and other financial institutions where you can save the money deposited in the bank Individuals, trusts & societies, public and private limited companies are all eligible to open a recurring deposit account in the bank. The tenure of a recurring deposit is 6 months to 10 years, in case of any delay in the monthly payment the interest will be reduced and hence the maturity value will also be less.
Benefits of Recurring Deposit
- Recurring deposit gives you an option to avail loans up to 80% -90% of the deposit value.
- You can make a smaller investment every month for a minimum deposit of Rs. 500 (deposited in multiples of 100 thereafter) or make an every larger deposit.
- Few banks provide higher interests for recurring deposit than fixed deposit.
- The monthly instalment amount once fixed cannot be changed for the entire tenure. The amount cannot be made as a partial instalment nor can you exceed the fixed monthly amount, you will not earn a higher interest rate for the additional amount.
- Premature withdrawal of the recurring deposit is possible.
- Passbooks, ATM cards and cheques are issued to the depositor
- Nomination facility is available for recurring deposit, where you can nominate a single person to your account
- Monthly payment can either be made through cheque or debited directly from the bank for which you may have to give standing instruction over your savings account to fund the fixed amount every month to the recurring deposit.
- Senior citizens are provided extra rate of interest, usually 0.5% more for a recurring deposit account other than the normal interest rate.
- While a penalty is applied in case you miss a monthly instalment, a grace period of one week is allowed whereby you can make the payment within the time limit.
- Interest rate is compounded on a quarterly basis for recurring deposit.
Having familiarized yourself with recurring deposit and its benefits, you can now easily make a decision on saving your earnings by opening a recurring deposit account.
Recurring deposit is one of the best ways to invest and save your money. While Fix Deposits are the first choice for most of the investors, the comparatively higher amounts required to invest might detract people. In contrast, a recurring deposit allows you to save in bits and pieces and earn decent returns while allowing you to become perfect in saving regularly. Keeping your money idle in savings bank account is worthless and RD should be a preferred choice of investment. And the best thing is, it is SAFE!
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While fixed deposits is one of the most chosen way of investing money, recurring deposits is becoming all the more popular these days. Opening up a recurring deposit account doesn’t hamper your pocket. It is a good way for youngsters, who usually do not have much in their pockets, to develop a habit of saving and investing money. Apart from all the advantages of recurring deposits, two of the major drawbacks are: once decided, the amount to be deposited every month can not be changed. Also, recurring deposits have a comparatively low rate of interest.
Recurring deposit is an investment scheme that allows an opportunity to build up savings through regular monthly deposits over a fixed period of time. Unlike FD, where banks and financial institutions necessitate you to invest a huge amount to start the deposit, RD allows you to enter into a saving scheme from an installment as low as Rs 500 per month. Also, RD offers equally attractive interest rates as that of FD. Premature withdrawal is also possible with nominal penalty amount.
Recurring deposit seems to be the best way of investing your earning or can say a nice investment policy for investors now a days. People used to choose fixed deposit policy but recurring deposit is trending now. The benefits of recurring deposit as mentioned above are great. People want many benefits from single investment plan and recurring deposit is something which gives variety benefits with simple investment.
Many pf us may not be able to save huge amounts of money every month. But most of us can have a determination to save a fixed sum of money; small or big. Recurring deposits are the best to choose in such a case. Thanks to the writer of the article to have brought into picture the advantages of investing in a recurring deposit scheme.