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  • Advantages of Investing in Recurring Deposits

    Recurring Deposit is one of the most preferred investment schemes available in India. Risk averse investors looking for a promising investment scheme with good returns choose Recurring Deposit because it is simple and is a straightforward financial product. Read on to find more about the advantages of investing in a Recurring Deposit scheme in India.

    What is a Recurring Deposit and How Does It Work?

    In a recurring deposit scheme, the investor deposits a set amount every month over a predefined tenure which generally varies between one year to five years. The recurring deposit scheme has one major differentiating point when compared to fixed deposits - in a fixed deposit scheme, the investor has to deposit a lump sum once and leave it untouched for a period of time. So, people who do not have a lump sum or people who are looking to invest a set amount every month usually prefer Recurring Deposits. The principal amount deposited is returned at the end of tenure along with the interest. Normally, the interest is calculated on a quarterly compounding basis for recurring deposits.

    How to Open a Recurring Deposit?

    All major private and public banks in India offer Recurring Deposit products for their customers. Also, India Post offers a very popular recurring deposit scheme in the name of Post office Recurring Deposit scheme. Follow the steps given below to open a recurring deposit account.

    • If you already have an account with the bank that you wish to open a Recurring Deposit with, you can contact the nearest bank branch or the bank’s customer service cell to open a recurring deposit account.
    • If you wish to open a recurring deposit account in a bank with you do not have an account with, you will have to contact the nearest branch and submit an application form. Also, you will have to submit basic KYC documents to open an account.
    • At the time of opening a recurring deposit account, the tenure as well as the monthly due amount (deposit amount) should be decided. Monthly payments for Recurring Deposits can be done online using ECS, online banking or fund transfer.

    Advantages of Recurring Deposits

    With banks offering an attractive interest rate for Recurring Deposit products, customers can gain the maximum out of their investments. Here are some of the advantages that come with Recurring Deposits.

    • Useful for Planning Short Term Goals

      Investing in a Recurring Deposit is completely risk free and gives guaranteed returns. Investing in Mutual Funds and Stocks might not be a safe option if you have short term investment goals. Because of this nature of RD, investors contemplating on short term goals in a time span of 1 to 3 years choose to involve in Recurring Deposit. Consider the situations given below, Recurring Deposit might just be the right financial product if you are planning to tackle short term situations that require financial assistance.

      • Yearly education fee for your kids
      • If you are employed, higher education costs
      • If you own a home, furnishing and renovation costs
      • Overseas vacation
      • Managing marriage expenses
    • Online Recurring Deposit Features

      With almost all popular banks offering online Recurring Deposit features, investing has just become easier. The customer can deposit money in Recurring Deposit account, close the RD account, open another RD, update information, view transactions, deposit details and do much more online. Think about making an investment and earning interest without even having to leave your home - investing in a Recurring Deposit is as easy as this.

    • Recurring Deposit Interest Rates

      Recurring Deposit interest rates depend on the tenure and deposit amount. In most cases, the Recurring Deposit interest rate is very similar to that of fixed deposits. Interest rates for RD vary from 7.25% to 9% depending on the bank and the plan chosen by the customer. Also, many banks offer higher interest rates for senior citizens. You can also use a RD calculator to find how much interest you will accumulate for the deposit amount, interest rate and tenure.

    • Ease of Investment

      In a Recurring Deposit scheme, the investor has to deposit a fixed sum every month which will build up a savings discipline. For salaried customers, it will be easier to set aside a particular amount every month as savings and for this, Recurring Deposit is the best option. Also, RD schemes come with guaranteed returns and the rate of interest for RD is locked in which will protect the investor from interest rate swings.

    • Flexible Recurring Deposit

      Some banks offer flexible Recurring Deposit schemes where the investor will not be penalized if the amount is not deposited during a particular month. Also, in a flexible RD scheme, you will be able to withdraw the amount from your RD account anytime you want.

    Disadvantages of Recurring Deposits

    A financial product comes with benefits, but will always have some flaws. Let us take a look at certain things that may be slightly discouraging, when you are taking recurring deposit as your saving instrument:

    1. Liquidity: When you deposit the money in an RD, you will never have the privilege to withdraw any part of the money until the term of the deposit is over. Hence, if you are looking for an easy liquidity instrument, recurring deposits are an absolute bad idea. On the other hand, if you want to discipline your savings this disadvantage may work to your benefit.
    2. Rate of Interest: The interest rate that you earn on recurring deposit is much lower that regular fixed deposit schemes, since your deposits are being made in small installments and not as a whole chunk.
    3. Stringent Monthly Installments: It is not possible in the case of recurring deposits to be able to change your deposit amount, regardless of your financial situation at the moment. With a fixed amount for investment each month, someone with chances of extra or less funds for the deposit should be discouraged from opting for this product.
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    Customer Reviews

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    • review Saving Account
      "Good"
      HSBC BANK
      0.5 3.0/5 "Satisfactory"
      My salary account was maintained with HSBC Bank for 7 years. Face to face banking experience is really good with HSBC Bank. They don't have option for IMPS transfer on online banking. Whenever I login the net banking, it ask for OTP due to security purpose which is unnecessary and not required.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • HDFC Bank Two Wheeler Loan
      "Need to reduce charges"
      HDFC BANK
      0.5 3.0/5 "Satisfactory"
      I had taken a Two wheeler loan with HDFC bank.The loan amount is 70,000 i had closed the loan long back.The EMI is paid through online.I would not recoothe service as they have too many charges on my account and they don't give proper response to the customers.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • Standard Chartered Bank Personal Loan
      "Average"
      STANDARD CHARTERED BANK
      0.5 3.0/5 "Satisfactory"
      I had applied for a personal loan with Standard Chartered Bank through online. I had to followup a lot and they took long time to disburse my loan. The customer service was not up to the mark. The documents are collected by the executive at doorstep. The part payment and pre closure option is average. There is a penalty for pre closing. Part payment I cannot more than 25% in the first year.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • Liberty Videocon Two Wheeler Insurance
      "Good policy"
      LIBERTY VIDEOCON GENERAL INSURANCE
      0.5 4.0/5 "Great!"
      I have taken Two Wheeler Insurance with Liberty Videocon Insurance.I have it for last year.I pay a premium of 1500 in year.The payment is done through online.I get a good policy coverage amount of 50k.The customer service respond on time.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • review Other Loan
      "Good service"
      PAYTM PAYMENTS BANK LTD
      0.5 4.0/5 "Great!"
      I use Paytm for quite a few years,most of time i use paytm for ordering food online at restaurants,to book tickets and also for booking movie tickets,recharges and electricity bills.The website is easy to understand and navigate and never faced technical issues.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • HDFC Bank Credit Card
      "Good card to use"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I have taken HDFC bank credit card they had offered a limit of 60,000.I have been holding this card for last three years now they have increased to 97,000.I need pay an annual fees to hold this card.Net banking is user friendly.I get best offers.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • Bank Bazaar Credit Card
      "Good service"
      HSBC BANK
      0.5 4.0/5 "Great!"
      The website is very useful to choose right products with aright bank.The credit card is dispatched on time through bank bazaar.The executives give prompt response to the customers.I ma overall satisfied with the service of the team.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • HSBC Bank Credit Card
      "Good service"
      HSBC BANK
      0.5 5.0/5 "Blown Away!"
      I have taken a credit card with HSBC.The limit is 97,000.The card is applicable for an annual fees.I got many offers but i have v not availed those offers.They had processed the card within a week post submitting documents.Net banking is user friendly.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2018
    • Standard Chartered Bank Personal Loan
      "Excellent"
      STANDARD CHARTERED BANK
      0.5 5.0/5 "Blown Away!"
      I had applied my personal loan through online channel. I hold a salary account with Standard Chartered Bank. It was an excellent experience on my personal loan. The rate of interest was good and they offered around 13%. I am completely happy with the bank service.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • ICICI Lombard Car Insurance
      "Good insurance"
      ICICI LOMBARD GENERAL INSURANCE
      0.5 4.0/5 "Great!"
      I hold a car insurance with ICICI Lombard for one year. This insurance was suggested by the dealer. The customer service was okay not very good. There was no claim experience till now. I paid for bumper to bumper service. The IDV value is 3.5L which was good.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • HDFC Bank Car Loan
      "Satisfactory"
      HDFC BANK
      0.5 4.0/5 "Great!"
      My car loan was taken with HDFC Bank before 3.5 years. The interest rate was normal. I have purchased Grand i10. I took 5L and the duration period is 5 years. I have to pay monthly premium as 10,772 rupees through ECS. The services are good on my car loan.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • HDFC Bank Credit Card
      "Credit limit has to be increased"
      HDFC BANK
      0.5 3.0/5 "Satisfactory"
      HDFC has offered me a Platinum credit card. I am using this card for more than 5 years. I am not satisfied with the credit limit, I was expecting more than 3.5L. They don't charge annual fee. I have been using the card for online shopping, petrol and etc.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • SBI Saving Account
      "Good"
      STATE BANK OF INDIA
      0.5 4.0/5 "Great!"
      I have a joint account with State Bank of India for past 3 years. It was accessed by me and my wife. I tried calling the customer service and no need to waiter on the queue. The response was proper. I had to maintain a minimum balance of Rs.2500 for every month.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • HDFC Bank Saving Account
      "Good account"
      HDFC BANK
      0.5 3.0/5 "Satisfactory"
      I have a salary account with the HDFC Bank. I am using this account for more than 12 years. The customer service and response was average. I have taken a loan with them and the interest rate was average. It is a zero balance account. ATM services are good.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • Bank Bazaar Personal Loan
      "Better"
      STANDARD CHARTERED BANK
      0.5 5.0/5 "Blown Away!"
      Everything was good with bankbazaar.com. The customer service and response was satisfactory. They process my application on time to the bank which was helpful to get a personal loan. The online portal is easy to access and good. Its recommendable to others.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • Standard Chartered Bank Personal Loan
      "Beter"
      STANDARD CHARTERED BANK
      0.5 5.0/5 "Blown Away!"
      I had a nice experience with Standard Chartered Bank. But I haven't received the loan papers yet. They offered normal interest rate and there is no processing fee. The documents are collected by the executive. They disbursed the loan on the promised date.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 20, 2018
    • Bank Bazaar Credit Card
      "Good service"
      INDUSIND BANK LTD
      0.5 4.0/5 "Great!"
      I have contacted bank bazaar for my credit card request.I have been using the website for last few months.They had immediately responded and they have suggested a good bank in the market.The options on the Website is very useful to operate, and its user friendly.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 20, 2018
    • IndusInd Bank Credit Card
      "Good card to use "
      INDUSIND BANK LTD
      0.5 4.0/5 "Great!"
      I have taken a credit card with Indusind bank.The limit on the card is 35,000.I am not happy with the limit as i am looking for a better limit.The service is good and the process was simple with Indusind.I pay my card bills through online.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 20, 2018
    • SBI Car Loan
      "Best service"
      STATE BANK OF INDIA
      0.5 4.0/5 "Great!"
      I have taken a Car loan with State bank of India.The loan amount is seven lakhs,rate of interest is nominal as compared to others.They had deducted minimum amount of processing fees.I pay my EMI through an ECS payment.The loan process is simple with SBI.
      Was this review helpful? 0
      , chennai
      Reviewed on Jan 20, 2018
    • ICICI Bank Saving Account
      "Good service"
      ICICI BANK
      0.5 4.0/5 "Great!"
      I have opened a salaried account with ICICI bank.I have been banking with them for last seven years.I get good response from the customers.I use mobile App and i feel its a best bank to be with.I have enough ATM's located in my place.
      Was this review helpful? 0
      , chennai
      Reviewed on Jan 20, 2018
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