What Is A Recurring Deposit?

What Is A Recurring Deposit?

A Recurring Deposit, commonly known as RD, is a novel term-deposit that's offered by Indian Banks. It is an investment device which allows people to make regular deposits and earn decent returns on the investment. As a result of common deposit factor and an interest element, it often provides flexibility and ease of investments to users/individuals.

Nonetheless, it is essential to know that RDs are different from Fixed Deposits/FDs . RDs are flexible in most aspects. An RD account holder can choose to take a position a fixed amount every month while incomes respectable curiosity on the amount. RDs are a really perfect saving-cum-investment instrument.

Most main banks in India offer Recurring Deposit Accounts, with a term that usually ranges between 6 months to 10 years, also providing people with the opportunity to choose a term in keeping with their needs. However, the interest rate, once determined, doesn't change in the course of the tenure; and on maturity, the person might be paid a lumpsum amount which contains the regular investments as well as the interest earned.

Features of a Recurring Deposit Account

Recurring Deposit schemes intention at inculcating an everyday behavior of saving in individuals
The minimal amount for deposits often varies from one bank to another. You may invest with an quantity as small as Rs. 1000.
The minimal period of deposit is six months, while the utmost interval of a deposit is 10 years
The rate of curiosity is equivalent to that offered for a Fixed Deposit. Subsequently, the interest rates are higher than Financial savings Account.
Premature withdrawals are Nonetheless, depending on the bank, they could let you close your account earlier than the maturity period on certain conditions.
A Recurring Deposit might be funded periodically through Standing Directions which are usually instructions given by the client to the bank, to credit the RD account each month from his/her Savings or Present Account.
With HDFC Bank Recurring Deposits, you may-

Begin with an funding as small as Rs. one thousand (and in multiples of Rs. 100 after) or as giant as Rs. 14,ninety nine,900 per 30 days
Minimum tenure of about 6 months (and in multiples of three months thereafter) up to a maximum tenure of 10 years
For a smaller funding per month, get interest rates which might be equal to that of regular Fixed Deposits

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