Recurring Deposit is very popular investment scheme in India because of the guaranteed returns that it offers. It is always better to stay informed about all the terms and conditions associated with an investment scheme to be able to reap full benefits. When it comes to Recurring Deposit schemes, paying the deposit amount on time is very important. Read on to find more about what happens if you miss paying your recurring deposit on time and how to avoid such penalties.
What is a Recurring Deposit Due?
In a Recurring Deposit scheme, the customer will have to deposit fixed amounts every month into the account over a predefined period of time. The amount that has to be deposited every month is known as due.
If a customer has opted for a RD scheme where he has to deposit Rs. 5000 every month for a period of one year, Rs. 5000 becomes the due amount. The customer will have to deposit the due amount every month to the Recurring Deposit account by a variety of means like cash, standing instructions or local cheque. Instalments for a month must be credited to the Recurring Deposit Account on or before the last working day of that particular month.
What Happens If You Miss the Recurring Deposit Due for a Particular Month?
- If by chance, you forget to pay the Recurring Deposit due for a month, you bank might charge a penalty. Read the terms and conditions for your RD scheme carefully to know the penalty for non-payment of monthly due.
- If the customer does not pay the deposit amount for consecutive months, his RD account will be permanently deactivated or closed until he pays the outstanding amount. This time period varies from 3 months to 5 months depending on the bank.
- However, if your Recurring Deposit scheme is flexible, you can choose not to pay the deposit amount for a month and you will not be charged any penalty.
How to Avoid the Penalty for Non Payment of Recurring Deposit Due?
- If your problem is that you forget to make payments for RD, set up a standing instruction facility where the amount will be automatically debited from your account and transferred to Recurring Deposit account.
- In case you don’t have sufficient funds to pay for your Recurring Deposit Due every month, try saving some money till you pay or lower the RD deposit amount for good.
- You can also opt for a flexible Recurring Deposit scheme where you will not be penalized if you do not pay the due for a month or two.
- Check the blueprint for the penalty that you will incur if you do not make a deposit for a month. Opt for a Recurring Deposit scheme that comes with the lowest penalty rate.