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Learn About Recurring Deposit Through These FAQs

Making your savings work is the best way to use them optimally. A recurring deposit is the best option to do it. It lets you invest in small bits from your regular income every month. You then receive returns on your investments upon maturity. The RD interest rates are assured and safer compared to other financing instruments.  

It is the most sort-after investment option due to its assured returns. It is convenient to maintain without worrying about the market fluctuations affecting the gains. The entire process of opening it and managing it gets carried out digitally through online portals and banking apps. If you want to open it and are unsure of its working, read these FAQs: 

Can I withdraw my recurring deposit amount before maturity?

Pre-mature withdrawal is not allowed as it is a term deposit. However, you can redeem the account at any point by paying the penalty. This fee gets charged by deducting from the interest earned.

What tax-saving benefits do I get on RD accounts?

A 10 per cent tax gets deducted from your recurring deposit interest rate only when it exceeds Rs. 10,000. You also have the right to claim an exemption if your income is below the tax bracket. You do this by submitting form 15G or 15H. 

With what amount can I get a recurring deposit account?

The minimum deposit amount differs from bank to bank. However, you can typically invest as low as Rs. 100 for the public sector and Rs.500 to Rs. 1000 for private sector banks. It allows you to fund in small bits. 

I want to keep my RD investment for 10 months only, is it allowed?

Yes, the tenure for the recurring deposit ranges from six months to 10 years. So, you can invest for 10 months with ease. 

What are the returns I get on recurring deposits?

You get recurring deposit rates based on your principal amount and the tenure you decide. The typical gains are higher than a savings account and like fixed deposits. Senior citizens get additional interest benefits. 

What happens when I miss my monthly deposit instalment?

The deposit gets decided on a pre-determined tenure. Delay by even a day results in a penalty on the interest for the whole month. This affects your maturity interest pay-out. Consecutive late payments may also terminate your account. It is best to track and automate such deposits by using banking apps. 

Why should I invest in a recurring deposit? 

You should invest in it if you want to earn for small-term goals with a risk-aversive instrument.