Recurring deposit or commonly referred as RD is an investment scheme in India in which you can deposit a fixed amount every month into a recurring deposit account. For a beginner, the recurring deposit is a safe and reliable option for investment. It is convenient as the account holder will get to choose the amount he/she wants to deposit. In other words, it is similar to FDs but more flexible. Almost all major banks in India have the facility of RD with a period ranging from 6 months and ten years. As there is a high competition to attract more customers, the banks offer enticing interest rates. However, unlike mutual funds, the interest rate once fixed does not change during the whole tenure. Still, people like to invest in RD as it has got plenty of benefits.
- Attractive interest rates
The thing that attracts the investors toward recurring deposit is interest rates as they are considerably high. The interest rates on RD accounts vary from 7.25% to 9% depending on the banks and also the plan chosen by the customer. These days, banks offer higher interest rates to senior citizens.
- Easy investment
Investing RD is pretty simple and hassle-free. You will have to invest a fixed sum every month which will ultimately build up the future savings. Salaried customers can spare the specific amount every month for savings. Furthermore, the recurring deposit has a steady and locked interest rate, so the customers are immune to interest rate swings, guaranteeing higher returns.
- Best suited for short-term goals
RD is the best suited for short-term goals. The short-term goals are defined for 1-3 years. Any short-term goal like yearly school expenses of kids, short vacations, renovation or repairing can be done with the help of a recurring deposit.
The documentation required to open the new recurring account is not tedious. You only have to submit address proof and identity proof. The banks have made it a lot easier to attract more customers. The documents like PAN card, Passport are sufficient. Some banks may ask for income details.
To make it convenient, banks are not penalizing the customers if the deposition is missed during a particular month. Earlier, banks used to punish the customers if the monthly deposit is missed. In addition to that, banks are allowing to withdraw the amount from the RD account any time customers want.
- Online Facility
Banks are looking to make more convenient for customers as almost all of them are offering an online recurring deposit. Now, the customer can open an RD account, close RD account, update the information, make the transaction, view the transaction details etc. You will not have to visit the bank again and again for minor paperwork.
The recurring deposit is an excellent option for investment. It is flexible, comfortable and has a better interest rate. As banks are providing attractive offers, the recurring deposit has become a prudent investment. For anyone who wishes to have risk-free, reliable and hassle-free investment in RD is the best option.