What Happens If You Miss to Pay the Recurring Deposit Due on Time?

Recurring Deposit is among the most popular investment schemes in the country due to various reasons. A number of reasons has made an RD one of the top investment options for people, especially for first-time investors because of its safety and guaranteed returns. Since a Recurring Deposit account does not depend on the market and comes with a fixed return of interest, an RD would be among the ideal investment vehicles to park your money.

What is a Recurring Deposit Due?

In an RD scheme, a 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 person has opted for a RD scheme where he has to deposit Rs.5,000 every month for a period of one year, Rs.5,000 becomes the due amount. The account holder can deposit the due amount every month to the Recurring Deposit account by a variety of means like cash, standing instructions or local cheque. Installments 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, due to various reasons, the Recurring Deposit due for a month is not credited or paid, your bank may charge a penalty. However, this varies from one bank to another and it is advised to read the terms and conditions for the RD scheme to know the penalty for non-payment of monthly due.
  • If the account holder 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?

  • There are several ways by which you can avoid the non-payment of your Recurring Deposit due. One of the ways would be to 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, it is advised to save 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.

Recurring Deposit FAQs

  1. Do I need to pay a penalty if there is a delay in the payment of RD instalment?

    Yes, if you miss paying the RD installment on the due date, the bank will charge you a penalty.

  2. When opening an RD account, Can I decide the amount which will be deposited in the account?

    Yes, you can decide the amount which needs to be deposited in the account on the due date.

  3. If I miss paying the instalments for three consecutive months, will the RD account be closed?

    In case, you miss paying the instalments for three consecutive months, the RD account will be deactivated or closed by the lender. However, the time period varies from bank to bank so check about it with the bank or financial institutions at the time of opening the bank.

  4. Can I make the payment of the RD instalment using a cheque?

    Yes, the payment of the RD instalment can be made with the help of a cheque.

  5. How much do I need to pay as penalty for missing a RD instalment?

    The penalty varies from bank to bank. You need to check with the bank where you have opened the recurring deposit account.

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