A recurring deposit is a special type of term deposit. These specialized term deposit schemes are usually offered by banks. The most popular banks offering recurring deposits are State Bank of India (SBI), HDFC, etc. In fact, post offices also offer these kinds of specialized term deposit schemes. In this article, I’ll walk you through the various queries you were searching for.
If you are looking for the answer of all these questions or some of these questions, please continue reading.
Recurring Deposit (or RD in short) is a special type of term deposit. You have to save a pre-specified amount of money at periodic intervals (usually, monthly) for a long period of time (say, 5-years, 10 years, etc.).
You can open banks recurring deposit accounts either at banks or post offices. Some of the best interest rates on RDs are provided by:
You can use a recurring deposit calculator to know how much money you’ll get at the end of the maturity period. To keep your account active, you have to keep making consecutive installments for the entire period till maturity. You can open an RD account online. A premature withdrawal facility is also available in most of these recurring deposit accounts. Inquire about these aspects while opening an RD with your bank.
You can open recurring deposit accounts at any bank or post office. This account pays you an interest rate on the amount of money (which is predetermined at the time of opening an RD) you invest on a monthly basis.
The period of recurring deposit RD can be anything from 6 months to 10 years. The rate of interest paid by the bank to an RD account holder varies on the basis of the time period invested. The longer you invest, the more interest you earn. The interest rate calculation of recurring deposits is done on a quarterly basis and not yearly.
The minimum deposit amount you can contribute to RD accounts every month is Rs. 100. The interest-bearing RD will help you to build a fund at the end of the maturity period by contributing small amounts of money every month.
You can give standing instructions to your bank (either through net banking, mobile banking or visiting your bank branch) to deduct a certain amount of money from your bank account (savings account, current account, or salary account) and credit it to the Recurring Deposit account for a certain period of time.
The maturity value will be mentioned at the time you open a recurring deposit account. It is assumed that you’ll regularly pay all the monthly installments on due dates. In case, you are unable to pay any installment, the interest rate for that particular month will be deducted from the maturity value as a penalty.
RD accounts (just like Fixed Deposit or FD accounts) are subjected to 10% TDS (Tax Deducted at Source) if the interest earned is more than Rs. 10,000 in a financial year. The bank will deduct the TDS amount from the maturity amount at the time of maturity.
RD rates at SBI vary from time to time and on the basis of the time period deposited. While the minimum and maximum RD periods are 12-months (1-year) and 120 months (10-years) respectively. The minimum deposit amount is RS. 100.
For general citizens, the current RD rate varies from 5% to 5.4% up to a deposit of Rs. 2 crores. Senior citizens receive an additional 0.5%. Any Indian citizen or NRIs (non-resident Indians) can open e-RD accounts on SBI.
While the minimum and maximum RD periods are 6-months and 120 months (10-years) respectively. The minimum deposit amount is RS. 100.
For general citizens, the current RD rate varies from 3.5% to 5.5% up to a deposit of Rs. 2 crores. RD rates at HDFC vary from time to time and on the basis of the time period deposited. Senior citizens receive an additional 0.5% on their RD accounts. Any Indian citizen, Hindu Undivided Families (HUF), Private Company, Public Limited Company, Trust, or Society can open online recurring deposit accounts on HDFC.
The post office recurring deposit period is of 60 months (5-years). The minimum deposit amount is RS. 100. The current RD rate is 5.8% per annum, which is compounded quarterly. Premature closure with a penalty can be done only after 3-years.
You can open an RD account either online or offline. Almost all banks in India allow their users to open an RD account with them. You can either visit their branches and fill up the requisite forms or open an account online. To receive TDS exemption on the interest earned from RDs, you’ve to submit Form 15G/15H. Download forms from the website of the requisite bank
Yes, you should definitely invest in recurring deposits to create a fund (and also earn an interest rate on it) over a long period of time, ranging from 6 months to 10 years. You can use this fund for paying off your outstanding credit card bills, bank home loan, personal loan debts, travel insurance, education loans, car loans, life insurance, loan against property, gold loan, and many more. Use an RD calculator to know how much you have to invest in monthly installments to get your desired amount of money.
Whether phone banking or personal banking, you can open your RD account in almost any bank. Some of the most important banks to open your recurring deposit account through internet banking are ICICI banks, Kotak Mahindra Bank, Axis Bank, SBI, HDFC, and others.
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