Are you are searching for Recurring Deposit and don’t know What Is Recurring Deposit? Here, you can get all the information about RD. Find out the eligibility of RD, Advantages, Features, etc. Read the full article to know the details of Recurring Deposit.
Recurring Deposit – Overview
The short form of Recurring Deposit is RD. It is a kind of the saving account. RD is similar to FD. The Recurring Deposit is also known as a Term Deposit. It is one of the best saving methods among all the savings. The individuals who don’t know What Is Recurring Deposit had come to a right place. Here, you can see all the information regarding Recurring Deposit.
There are many advantages and Benefits for Recurring Deposit. After the completion of the tenure period, you can receive the money along with interest. At present many banks are offering the Recurring Deposits. Therefore, the interested candidates can apply for a new RD Account. To know more details about Recurring Deposit features and advantages follow the below sections.
What is Recurring Deposit
RD is an investment tool to make regular deposits and earn decent returns on the investment. Recurring Deposit contains regular deposits and compound interest. Therefore, the individuals can choose the investing amount for saving the money in Recurring Deposit every month. Fixed Deposits are rigid and not ideal for short terms, but the Recurring Deposit is an ideal investment and the best saving option. Compared to other savings, the interest rates are higher for Recurring Deposit. The users can also calculate their RD maturity amount through RD Calculator.
The minimum Recurring Deposit tenure period is 6 months and the maximum tenure period is 10 years. As per your choice, you can select the tenure period for Recurring Deposit. The interest rates of Recurring Deposit varies according to the tenure period. At the time of taking the maturity amount, the individuals receive a lump sum amount, and it includes regular, periodic investments, and interest earned on them.
Eligibility for RD
- Resident Indians and Hindu Undivided Families are eligible for Recurring Deposit.
- In some banks, children’s also eligible for opening a Recurring Deposit Account.
- Minors can also apply for RD Account by parents or guardians to supervise them and to maintain the finances.
Recurring Deposit Duration
Recurring Deposit is almost available in all banks. Before investing the money in Recurring Deposit, the individuals have to know the tenure periods of all banks. The minimum tenure period of RD is 6 months. There is an option for you to increase the tenure period. The Recurring Deposit’s maximum duration period is 10 years. The minimum duration period of RD may vary according to the particular bank. In some banks, the RD’s minimum duration is 24 months.
Renewals & Withdrawals of Recurring Deposit
The individuals who are fixed depositing some amount of money every month in Recurring Deposit can withdrawal the money. After the completion of the tenure period, the investors can withdrawal the money. The interest rate varies according to the duration time. So, the people have to check the interest rates before investing the money. If you delay for any deposit, the interest is taken from our amount. Therefore, you will lose some amount from the maturity value. There are many terms and conditions for Recurring Deposit.
Recurring Deposit Premature Withdrawal
The RD Account holders who withdrawals the money before the maturity period, they have to pay the penalty for the bank. The penalty may be 1% and sometimes depends on the particular banks. Premature withdrawals are possible when the interest rate offered by the bank would be less when compared to the normal interest rate. The premature withdrawals interest rate is approximately 8.40% per annum. The premature penalty rate is 1% to 2% depends on the bank. The minimum term period of recurring deposit is 3 months. If you want a premature withdrawal, you should be withdrawal the maturity amount before 3 months. Therefore, the RD Holders would not earn any interest at the time of premature withdrawal. Along with the penalty, addition incentives offered on the recurring deposit also cancelled due to premature withdrawal.
RD Partial Withdrawal
The Recurring Deposit partial withdrawals are not allowed by all banks. Only a few banks allow the partial withdrawals on RD in the form of loans or overdraft. The banks are allowing premature withdrawal for a penalty of 1%, but the partial withdrawal is no allowed. If you want partial withdrawal, you have to deposit your money in a post office for one year. Therefore, you can make a partial withdrawal from your recurring deposit maturity amount.
Nomination of Recurring Deposit
The RD also having a nomination facility. For a recurring deposit account, only one nominee either single or joint is eligible. You can change the nominee whenever you want. Minors are also eligible for recurring deposit. They should have a nominee for guardian.
Recurring Deposit loans
This section explains about what is Recurring Deposit loans. Many banks are offering loans and overdrafts on Recurring Deposit. Therefore, every individual who is having RD Accounts can apply for loans. You can get 75% to 90% loans from your recurring deposit amount. Depending on the bank and tenure period the interest rates varies. So, check the interest rates and apply for the loans.
Income TAX on RD
The tax deduction is applicable on the recurring deposits based on the interest rates. The account holder should pay the income tax according to his/her income. For example, if the recurring deposit is Rs.10,000 then the tax deducted from the RD amount is 10%. If the individual’s income does not fall, they have to submit form 15G to avoid Tax Deduction at Source.
NRI & NRE – Recurring Deposit
For NRIs and NREs the best saving option is Recurring Deposit. They can save their huge money in banks in the form of small investments for every month. NRIs can invest their money either in NRO or NRE Recurring Deposit. To know more details read the below points.
NRE Recurring Deposit Account:
- The deposit investments should be credited from NRE Account.
- They can change their account to their home country whenever they want.
NRO Recurring Deposit Account:
- The investment should be either NRE or NRO accounts.
- The NROs Recurring Deposit interest or taxable rate is 30%.
Recurring Deposit for Senior Citizens
The RD is a saving account as many people are saving their money monthly in banks. The senior citizen’s RD interest rates are higher than the regular deposits. Many banks are offering high-interest rates for senior citizens. The interest rate is 0.25% to 0.75% higher than the regular depositors.
Features of Recurring Deposit
Many people don’t know What is Recurring Deposit. There are many advantages and benefits for RD Account. You can get loans up to 90% from your Recurring Deposit maturity amount. The interest rates are also high for RD’s. Comparing with the regular depositors the senior citizens are having more interest rates on Recurring deposit. The features of RD is given below. So, the interested candidates can see the below sections and apply for a new RD account.
- The minimum deposit tenure is 6 months and the maximum tenure period is 10 years.
- The interest rate is higher than all other saving schemes.
- Premature and mid-term withdrawals are not allowed by the banks.
- Senior citizens have more benefits and advantages compared with the general depositors.
After knowing What is Recurring Deposit, you will definitely want to open an RD account. To calculate the RD Amount, use the RD calculator provided below.