Recurring Deposit

Recurring Deposit

A recurring deposit is a unique type of investment where individuals make regular monthly deposits and earn a fixed interest on those deposits. It functions similarly to a fixed deposit but involves monthly contributions. This low-risk investment option offers moderate returns, providing a reliable way to grow your savings over time.
A Recurring Deposit (RD) is an investment option offered by banks, with terms ranging from 6 months to 10 years. It allows you to set aside money on a monthly basis, ensuring safe returns for the future. Investors can choose the amount they wish to deposit each month, making it a flexible and secure way to save.

What are the features of Recurring Deposit?

1) Minimum Deposit:
A Recurring Deposit does not require a large initial investment; you can start with a minimum amount, often as low as Rs. 500, and make regular monthly deposits.
2) Fixed Tenure:
A Recurring Deposit has a fixed investment period, which can range from several months to several years.
3) Fixed Interest Rate:
When opening a Recurring Deposit account, the interest rate is fixed and remains unchanged for the entire investment period.

What are the Benefits of Recurring Deposits?

1) Ensures Regular Savings:

A recurring deposit helps you save regularly to achieve specific goals, typically short-term or for smaller expenses such as travel, education, or weddings. This not only aids in reaching your objectives but also instills a disciplined approach to monthly savings.

2) Higher Interest Rate:

A Recurring Deposit typically offers a higher interest rate than a regular savings account. The interest rate is fixed, ensuring there are no fluctuations over the deposit period.

3) Safe and secure Investment Opportunity:

A Recurring Deposit is ideal for those seeking a safe and secure return while diversifying their investments. It offers a higher, fixed interest rate, ensuring that market fluctuations do not affect your earnings.

4) Start with small amount:

Individuals who wish to deposit small amounts can open a recurring deposit account. There are no requirements to have large sums like Rs. 10,000 or 1 lakh; you can start with as little as Rs. 1,000.

5) No penalties for Missing Deposit:

Banks or financial institutions do not impose any charges for missed or late deposits in a recurring deposit account.

6) Automatically Deducts amount:

With a recurring deposit, you don’t need to worry about making manual deposits. Mobile banking offers a feature that automatically deducts the amount from your account.

7) Loan Facility:

Banks offer loans against recurring deposits, with the loan amount typically ranging from 90% to 95% of the deposit value.

Recurring Deposit Calculator

Recurring deposit calculator