The Hush Post | 18:20 pm| 3-minute-Read
Most of the banks in India offer the option of opening a Recurring Deposit (RD) account. It allows customers to save a fixed sum every month and earn an interest income on the it. Interest rates offered on Recurring Deposits (RDs) are the same as that on fixed deposit (FD) accounts. The difference is that in case of FDs, customers have to deposit the amount and keep it blocked until a fixed maturity period. In case of RDs, customers can deposit the sum every month and thus RDs help them build their savings through regular deposits.
Things to know about RDs
- RD can be started with a minimum monthly payment of Rs. 100 and in multiples of Rs.10 further. There is no maximum limit on the monthly deposited amount.
- The minimum tenure for the RD is 12 months and maximum is 10 years or 120 months.
- TDS is applicable on the deposited amount.
- There is an option of taking loan or overdraft upto the amount of 90% of the total balance available in the Recurring Deposit.
- Premature with-drawl is allowed on the Ro with special terms and conditions but most of the banks don’t charge any Exit load if the same is closed prematurely also.
- Nomination facility os there is RD and it is advisable also to opt for this facility to cover any hassles in case of the life loss.
- Some banks also issue passbooks against the RD.
- There are small charges also in case a person defaults on the amount to be deposited in the RD. These charges are term-based and depend from bank to bank.
- Service charges are applicable on the Recurring deposit paid out. In case of default of 3 or more installments service charges are applicable for regularisation of the same.
- in case of 6 installments not getting deposited Recurring Deposit is closed prematurely and money is paid out.