Benefits of Investing In Recurring Deposits

by Edwin Rosenthal

Recurring deposits(RD) are for those people who want to invest regularly for a certain period of time and earn a better returns of higher interest. Many banks are offering to open recurring deposit accounts for making investments on a long-term basis. It is something similar to a Fixed Deposit, where instead of making a lump-sum investment, you invest part of the fixed investment every month. This popular periodic investment is available only in India.

In case of recurring deposit certain fixed amount must be paid in every month on or before the accepted date and this amount is invested for a specified period. At last the total invested amount is repaid to the investor with interest at the end of the particular fixed period. This period can be a minimum of six months and maximum of ten years.

The minimum and maximum amount to be paid varie from bank to bank. However, you can open an RD account for a minimum of Rs.100 and multiple installments of Rs.100/- up to Rs.1 lakh can be chosen as installment amount that will be fixed for the entire tenure of the RD. Your money is locked as withdrawals are not permissible. However, the bank may also allow you to close RD account before the maturity period. Some banks provide loan facility, for RD account holders. They can give loan up to 75% of the amount standing to the credit of the account holder.

The major benefits of recurring deposits are:

  • Recurring deposit make people to save regularly. Encourages saving habit.
  • Suits to a low income investor, as small periodic investments can grow to a large sum on maturity.
  • Recurring deposit account holder can avail the facility of getting loan easily.
  • Some banks offer extra benefits in the form of an additional 0.5% rate of interest to senior citizens.

Major banks, post offices and insurance companies have been offering this scheme in India. Hurry, tart investing today. Better late than never!


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