A Recurring Deposit which is also known as RD is a specific type of term deposit which is offered by the banks to their customers. This is a type of investment in which the investor if he can, deposits a definite sum of money after every regular intervals to in turn get good return on their investment. The return can be calculated easily by our RD calculator. You can also find out the highest RD rates across banks using the calculator. The RD basically consists of the recurring or the regular deposits and the component of the interest which provides flexibility to the customer to operate his account. The holders of an account may opt to go for a recurring deposit in which they can invest an amount which does not put pressure on them if they have any emergency or sudden requirement of money, and they can earn interest on the deposited amount. Since the fixed deposits become rigid to operate and are also not good for short term deposits, thus the RDs provide an ideal substitute for them and they are also very good investment and saving option.

Features of Recurring Deposit Account

In case of a recurring deposit the investor gets fixed amount of rate interest on the amount to be deposited or invested at regular intervals till the maturity date. When the investment period ends the investor is given the total maturity value which comprises of the total investment accumulated by regular deposits and the interest generated on that amount.

The Recurring Deposit account has features which are as follows:-

  1. This is a type of account which is designed as such that it inculcates the habit of regular saving and investment among the masses.
  2. Various banks differ on their opinion of minimum investment amount. But at instances amount as low as INR 10 can also be invested.
  3. A recurring deposit can be made for a period of minimum 6 months and maximum it may go on till 10 years. After 6 months increment can be made by 3 months and this can go up to maximum 10 years. The minimum time also differs and this can be minimum 24 months as per many banks.
  4. Rate of interest offered on a recurring deposit account is the same as that offered on the fixed deposit and it is thus higher than any other saving schemes available.
  5. The withdrawals which are premature or mid-term are not allowed by the bank. The bank may however allow the holder to  close the account prematurely but there are penalties ensued in such cases
  6. When a recurring deposit holder applies for a loan with the RD as collateral, then he is given benefits and up to 80-90 % of the amount deposited can be given to him as loan but the final decision rests on the bank.
  7. After maturity the recurring deposit can be deposited into your account as periodic funding whose instructions are given by the account holder as per his requirements or choices. The complete maturity value is deposited into his current or savings bank account every month in small sums.

Premature withdrawal of Recurring Deposit

In case of a premature withdrawal of a recurring deposit the account holder is penalised and he/she is given the interest rate only for the time for which he has deposited money or for which the bank had the amount minus one percent as penalty for premature withdrawal. Premature withdrawal is possible but there is penalty and some banks go up to deducting more than 1 and up to 2% from the remaining interest rate. However the minimum period for the RD to get interest is 3 months before this time the investor is just given the principle amount back.