What it means by "Recurring Deposit - RD"?
Recurring Deposit (FD) is an investment option that allows you to deposit your investments regularly for a fixed period of time and with fixed interest rate. It is a best financial solution for those who are capable of investing a fixed amount on regular basis to meet their financial goals. For FD, you need to invest lump sum amount over a fixed tenure, whereas in case of RD no need to wait till you collect lump sum amount, open an RD, invest regularly and earn handsome interest.
Important Points about Recurring Deposits
Term
Account holder can invest in recurring deposits over the tenure ranging from 1 year to 10 years.
Interest Rate
Based on the amount invested and tenure of RD, interest rates varies from 6.50 % to 8.00 %
Minimum and Maximum Limit
Minimum and Maximum limit is not written by rule but banks usually set minimum limit as 1000 Rs and maximum limit up to 15 Lacs per month.
Withdrawal
If for any reason you need to withdraw your investments in RD, it is usually not allowed but due to rising competition within banks, few of them allow with additional penalties over it.
Taxability and Tax Benefits
Banks deduct tax as a part of TDS and account holder can claim benefit as per Income Tax Act, 1961.Features of Recurring Deposits
When you open a RD, you are aware about your investment requirements on regular basis and thus to achieve your financial dreams you continue your saving habit over a long period. This helps you to become a matured investor.
All major banks offer online facilities to open RD, deposit details, information update and close the RD. Thus there is no need to visit a bank to open and operate your RD account.
Rate of interest for RD account is locked in which gives secure and guaranteed returns to investor irrespective of the interest rate fluctuations.
