Recurring Deposit Benefits 2025 – Safe & Steady Wealth Growth
A Recurring Deposit (RD) offers a range of advantages, making it an ideal savings option for individuals seeking stability and discipline in their finances. It allows you to invest a fixed amount monthly, encouraging regular saving habits without the pressure of large one-time investments.
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A recurring deposit (RD) is one of the most popular and secure investment options offered by Indian banks. It enables individuals with regular incomes to deposit a certain amount into their recurring deposit account on a monthly basis and receive returns.
The main advantage is that you do not have to invest a large sum in one go.
Top Seven Advantages of Recurring Deposits
Some of the benefits offered by recurring deposits are listed below:
Ideal for short-term financial goals - Recurring deposits may be an ideal investment option if you have short-term financial goals. They can be used to cover children’s education, vacations, construction/renovation of houses, marriages, etc.
Easy to access and operate - You can easily open a recurring deposit from the comfort of your home. Banks provide the option of opening/closing a recurring deposit, viewing deposit details, updating information, etc., online.
Competitive interest rates - One of the key benefits of a recurring deposit is the high interest rate. The interest rates offered for recurring deposits are higher than those offered for regular savings accounts. Most banks compound the interest rates on a quarterly basis.
Fixed and assured returns - Recurring deposits come with the benefit of guaranteed returns on maturity. The interest is fixed throughout the duration of the deposit, protecting you from interest rate fluctuations.
Minimum investment - Another benefit of investing in a recurring deposit is the minimum deposit amount which can be as low as Rs.50. Note that the minimum investment for recurring deposits varies from one bank to another.
Flexible recurring deposit - Some banks provide flexible recurring deposit options in which you are not penalised if you do not deposit the required amount during a given month. With this type of RD, you can withdraw funds from your account at your convenience.
Documentation is simple - The documents needed to start a recurring deposit account are simple. You can book a recurring deposit account with a linked savings account. This makes recurring deposits an easy and convenient way to grow wealth and avail guaranteed returns.
FAQs on Benefits of Investing in RD
- What is a recurring deposit
With a recurring deposit, you can deposit a fixed sum for a specified period of time. Upon maturity, you get your invested money back along with accumulated interest.
- Can I save tax on my recurring deposit?
Yes, you can save tax if you opt for a medium-term or long-term recurring deposit.
- How do banks calculate the maturity amount for a recurring deposit?
The calculation of the maturity amount is done depending on the depositor’s account type, tenure, and RD instalment.
- How much interest can I receive on my recurring deposit?
The interest rate on a recurring deposit varies from one bank to another. The amount of interest you receive is determined by the deposit amount, interest rate, and tenure of the recurring deposit account.
- Who is eligible to open a recurring deposit?
All individuals are eligible to open a recurring deposit. Some banks provide the option of opening an RD account jointly. Recurring deposits can even be opened in the name of minors.
- Can I cancel my recurring deposit before the term ends?
Yes, you can cancel your recurring deposit before the period expires. However, banks usually do not allow you to make partial withdrawals.
- Is the nomination facility available on a recurring deposit?
Yes, you must nominate someone as the beneficiary on opening a recurring deposit.
- Can I open an RD account online?
Yes, most banks allow you to book an RD account online.
- Do senior citizens get additional interest rates on recurring deposits?
Yes, most banks in India provide additional interest rates on recurring deposits to senior citizens.
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