What Is A Recurring Deposit: Requirements And Faqs?

Saving money is as important as earning it

Saving money is as important as earning it. This saved money can come to a rescue at numerous occasions where there is a need for urgent cash. Nobody is prepared for an unexpected financial burden. Hence when such situations arise, one has no other option left than to apply for a loan. The best way out of such situations is saving money beforehand for such rainy days. Systematic saving definitely helps to evade the financial stress in such situations. A lot of private and government operated banks and firms offer great financial products for effective money saving in India. Amongst various avenues of investment available in India, a recurring deposit is an easy and effective way of saving money. So, people with regular incomes who are looking for a stress-free investment option can definitely think of investing money in an RD.

What is a recurring deposit (RD)?

A recurring deposit account (RDA) is a kind of term investment plan wherein you can deposit a fixed sum of money every month. The tenure and the rate of interest of an RD account are predetermined. Numerous private and government ruled banks, organizations and the post offices in India offer the facility of an RDA. The deposited money or the tenure of an RD account matures on a specific date. Until that date, you need to keep depositing the minimum required deposit in the account. If any installment is delayed, the amount equal to the rate of interest is reduced from the recurring deposit account.

Benefits of a recurring deposit

There are a lot of benefits of an RD account:

The minimum amount of deposit for post office recurring deposit schemes is very affordable.

This amount varies for each bank and there is no upper limit for a recurring deposit.

The minimum tenure of RD is 12 months up to a maximum of 120 months or 10 years.

You can avail loan against your RD account.

Recurring deposit in India is also useful for tax benefits under section 80C of Income Tax Act.

The system of TDS is not applicable on any RD account.

In case you need money, you can borrow up to 90% of the RD money at current rate of interest.

You can easily open the RD account from any nearest bank. Once you do that, you can either make monthly deposits or the money automatically gets transferred to the RD account from your regular account.

Who can get a recurring deposit?

Any Indian citizen in the age group of 18 to 53 years.

People with a regular source of income including salaried and non-salaried professionals.

You can open the RD for single or joint account for the relatives as beneficiaries.

You can open an account for a minor as their guardian.

Any minor above the age of 10 years can open the post office recurring deposit account.

Institutions, clubs, firms, trusts, partnerships, associations and all such registered organizations.

by: lindadale

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