5 Benefits of the Recurring Deposit that You Need to Know

A recurring deposit is a term deposit which allows you to save a fixed amount of your income every month. Generally, financial institutions such as banks and the Post Office offer this kind of savings option. In a recurring deposit, you can contribute a small sum to build a substantial financial corpse and earn interest. Often, salaried individuals tend to opt for a recurring deposit account.

You can choose the timeline for long will your recurring deposit account will span. Usually, it spans from a minimum of six months to ten years. Also, to open a recurring deposit, all you need a meagre amount of 10 rupees.

In this article, we have listed some more benefits of recurring deposit:

Online availability:

With banks going digital, today, you can open a recurring deposit account from the comfort of your home. You can also carry out various activities online, such as:

  • Deposit money in recurring deposit (RD) account,
  • Close the RD account,
  • Open another RD,
  • Update information,
  • View transactions,
  • Deposit details, etc.

Investing in an online recurring deposit means making an investment and earning interest without leaving the comfort of your home.

Interest rates:

The interest rates of a recurring deposit depend majorly on the tenure and deposit amount. However, there are chances that it can be very similar to that of fixed deposits. Generally, the interest rates for RD can vary anywhere between 7.25% to 9%. This variation depends on the financial institution’s offering and the plan that you opt for. Many banks offer a higher interest rate for senior citizens.

Easy investment:

While investing in the recurring deposit, you have to deposit a fixed sum every month. This investment will build up a savings discipline. This kind of saving works best for salaried individuals as it is easier to invest a certain amount every month. Additionally, RDs also come with guaranteed returns. The rate of interest for RD is often locked. This helps to protect the investor from interest rate swings.

Flexibility:

Another benefit is that some banks offer flexibility the deposition of money every month. So, in case if you are unable to deposit money in any particular month, you will not have to pay a penalty fee. You can also withdraw your money from the account when you require and not wait for your account to mature.

These benefits of recurring deposit make it one of the safest ways to save finances.

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