Benefits of Recurring Deposit In 2023

Mar 22nd 2024
Fixed Income
Benefits of Recurring Deposit In 2023

Benefits of Recurring Deposit, Among different types of investment products available in India these days, recurring deposits are extremely popular among middle-class investors. The reason is quite evident – one can invest smaller amounts at regular investors and get attractive growth on the for the investment tenure. In addition, opening a recurring deposit is very easy now as it just takes a few minutes to open such an account. From post offices to banks, gold firms, and others, there are several avenues one can make a recurring deposit these days. Let’s find out more about recurring deposits in the following section of this post.

What Is A Recurring Deposit?

A recurring deposit simply refers to depositing money on a regular basis. A majority of banks and financial institutions offer this investment tool which allows individuals of all sorts to make regular deposits and earn attractive returns on their investments.

An RD account can be defined as a banking or postal service account in which a depositor puts a specific amount each month for a fixed period of time which may range from 1 to 5 years or more. This kind of setting is for investors who look forward to investing a particular amount each month in anticipation of obtaining a payoff in a few years.

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How RD Works?

In general, fixed deposits simply refers to a setting where a person places money aside that may be withdrawn after a specific period of time. It is to note that the investors cannot change the amount of the money or maybe add to it in the meantime.

For a majority of conditions, the process remains similar for the recurring deposits. Rather than investing the amount in one go, investors are obliged to make a regular monthly transfer into their account of the amount they choose at the time of the opening of an RD account. This amount can be as low as Rs. 100. And, at the time of the maturity, the investors will have a sizable amount in addition to your capital.

Calculate Your RD With Investkraft- RD Calculator

Benefits Of Recurring Deposit

1. Wonderful interest rate

Recurring Deposit Interest rates, The favourable interest rate that makes recurrent deposits more profitable than traditional savings accounts is their most advantageous feature. For instance, you may earn attractive interest rates on the deposited amount if you choose to open an RD account with Investkraft. The interest rates are computed annually and compounded four times a year.

2. Penalty not included

There was a time when monthly payments were pending, banks were used to charge penalties. Saving with an RD account, however, has grown more investor-friendly with Investkraft as it doesn’t charge any penalty for skipping a monthly pay out. There are no early withdrawal penalties for recurring deposits. However, the most recent interest will not be applied to your investment if you withdraw it too soon.

3. Start small

In the case of an RD account, even investors with low incomes may choose to save money because the minimum balance starts at about Rs. 500 and varies according on the bank or organisation. There are many banks and financial institutions that allow investors to start a recurring deposit with an amount of as low as Rs. 100. As a result, you may start with a budget that suits you and avoid making sacrifices when it comes to your everyday costs.

4. Flexible tenure

Recurring Deposit tenure, Similar to the minimal amount, you may pick a brief duration according on your demands or financial capabilities. It is a great choice for short-term investing because IDFC FIRST Bank allows you to start recurring deposit accounts for as little as six months.

5. Easy documentation

With the same bank where you currently have a savings account, you may open an RD account and link it to your savings account without providing any additional paperwork. As a result, beginning an RD is simple.

6. Great for short-term financial goals

An RD can be a great way to save money if you frequently establish short-term objectives like taking yearly vacations or replacing your phone or other electronics every few years.

7. Save through instalments

When individuals receive large sums of amount, most people open FDs. If your salary and spending plan leave you with less money at the end of the month, you may choose to open an RD account to make use of these excess money. By doing this, you may save modest sums that add up to a huge number over time, and the money you would have otherwise left sitting in your bank account would earn a greater interest rate.

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FAQs

1. Can I Open An RD Account On Joint Names?

Recurring deposits can be done under "First or Survivor/s" or "Anyone or Survivor" under the Joint Names of 2 or 3 pax. The first or primary depositor will receive all the communications. The name of the original depositor will be used for all interest payments and deposit repayments.

2. What Are The Major Factors To Consider While Opening An RD Account?

When you decide to open an RD account, it is necessary to take various factors into consideration in order to get the best outcomes. Some of these aspects are:

  • Investment Amount – Don’t forget to check the minimum amount that is allowed to be invested in a recurring deposit. This amount can be as low as Rs. 100.
  • Tenure – The next thing to check is the investment tenure that ranges between 6 months and 10 years.
  • Lock-in period – In most cases, the lock-in period in an RD account varies between 30 days and 3 months. During this period, no withdrawal can be made.
  • Interest rate - When compared to a standard savings account, the interest rates offered for recurring contributions are greater. The interest is typically compounded by banks every quarter.

3. Who Is Eligible To Open An RD Account?

Any person can open an RD account. However, a few banks and financial organization allow people to open such an account on joint names.

The Conclusion

For those looking for a safer, easier and effective investment option, Recurring Deposits With Investkraft are really wonderful. People usually invest smaller amounts in different recurring accounts and make that money grow over a period of time. No matter whoever you are, it is always easy to open an RD account with easy documentation. Investkraft offers attractive interest rates on recurring deposits.

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