A Recurring Deposit, commonly known as RD, is a unique term-deposit that is offered by Indian Banks. It is an investment tool which allows people to make regular deposits and earn decent returns on the investment. Due to the regular deposit factor and an interest component, it often provides flexibility and ease of investments to users/individuals.
However, it is essential to know that RDs are different from Fixed Deposits/FDs . RDs are flexible in most aspects. An RD account holder can choose to invest a fixed amount each month while earning decent interest on the amount. RDs are an ideal saving-cum-investment instrument.
Most major banks in India offerRecurring Deposit Accounts, with a term that often ranges between 6 months to 10 years, also providing individuals with the opportunity to choose a term according to their needs. However, the interest rate, once determined, does not change during the tenure; and on maturity, the individual will be paid a lumpsum amount which includes the regular investments as well as the interest earned.
Features of a Recurring Deposit Account
- Recurring Deposit schemes aim at inculcating a regular habit of saving in people
- The minimum amount for deposits often varies from one bank to another. You could invest with an amount as small as Rs. 1000.
- The minimum period of deposit is six months, while the maximum period of a deposit is 10 years
- The rate of interest is equivalent to that offered for a Fixed Deposit. Therefore, the interest rates are higher than Savings Account.
- Premature withdrawals are However, depending on the bank, they may allow you to close your account before the maturity period on certain conditions.
- A Recurring Deposit can be funded periodically through Standing Instructions that are usually instructions given by the customer to the bank, to credit theRD accountevery month from his/her Savings or Current Account.
With HDFC Bank Recurring Deposits, you can-
- Start with an investment as small as Rs. 1000 (and in multiples of Rs. 100 after) or as large as Rs. 1,99,99,900 per month
- Minimum tenure of about 6 months (and in multiples of 3 months thereafter) up to a maximum tenure of 10 years
- For a smaller investment per month, get interest rates that are equal to that of regular Fixed Deposits
Looking to apply for a Recurring Deposit in HDFC Bank? Clickhereto get started!
You can book your Recurring Deposit through an HDFC Bank Savings Account. New customers book a Recurring Deposit by opening a newSavingsAccount,existing HDFC Bank customers can book theirRecurring Depositby clicking here.
* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances.
FAQs
A Recurring Deposit, commonly known as RD, is a unique term-deposit that is offered by Indian Banks. It is an investment tool which allows people to make regular deposits and earn decent returns on the investment.
What is recurring account explanation? ›
What is a Current Account? A Current Account is a non-interest-bearing bank account, mainly used to service the needs of the businesses. Current Accounts allow for more transaction limits on cash deposits and withdrawal within or outside city.
What is an example of a recurring deposit account? ›
Example of an RD Account
Monthly deposit: ₹ 5,000. Tenure: 1 year. Total deposits: ₹ 60,000 (12 months x ₹ 5,000) Interest rate: 6% per annum, compounded quarterly.
Can I withdraw money from my RD account after maturity? ›
A Recurring Deposit is like a Fixed Deposit. Once the RD amount has been deposited, it cannot be withdrawn until maturity. Partial withdrawals from the account are not allowed.
What is the benefit of a RD account? ›
Ensure regular savings with a disciplined approach
One of the major advantages of setting up an RD is that it enables you to save money consistently. By opening an RD Account, you commit to depositing a specific amount of money each month for a predetermined duration.
What does RD mean on a bank statement? ›
Summary: A Recurring Deposit is a service where you can deposit fixed sum of money every month & earn high interest on it. Click to learn more about how RD accounts work.
What is recurring direct deposit? ›
A recurring direct deposit is when money is automatically deposited into your account at regular intervals.
How do I get my money from a Recurring Deposit? ›
RD offers a fixed interest on the invested amount at a specific frequency until the pre-determined term or upon maturity. At the end of the term, the amount upon maturity (your invested capital) and the remaining or accumulated interest are paid.
How do I deposit money into a Recurring Deposit account? ›
For most banks, internet banking is one way to make an online payment for RDs. Most internet banking layouts will also have an option to open a new Recurring Deposit account, where you have to mention the particulars about the Recurring Deposit, i.e., the tenure, the installment and the maturity instructions.
What is the difference between deposit and Recurring Deposit? ›
RDs allow individuals to save gradually, while FDs offer higher interest rates and a fixed maturity period. Additionally, RDs offer flexibility in deposit amounts and tenures, while FDs have stricter terms.
Premature withdrawal is only allowed if your RD account has been operational for one year and you have made at least 12 monthly deposits. You need to repay the premature withdrawal funds in either a series or lump sum. The withdrawal amount should only be in the multiples of ₹5.
Is Recurring Deposit good? ›
RDs are one of the safest forms of investments and aren't prone to risks. In a RD scheme, you have to deposit a fixed amount on a monthly basis. SIP is better option than RDs when talked about liquidity. You can close SIP and withdraw money without paying any penalty.
What is the minimum amount for Recurring Deposit? ›
A recurring deposit account can be opened for as less as Rs. 100 depending on the bank. The installment in most recurring deposit accounts is fixed and has to be deposited on the same day every month. Some schemes allow quarterly or half yearly installments.
What are the risks of recurring deposits? ›
Inflation risk: RDs are subject to inflation risk. If the interest rate offered on RDs is lower than the inflation rate, the real value of the investment may erode over time. Tax implications: The interest is taxable as per the depositor's income tax slab. This can reduce the overall returns on investment.
Do we need to pay RD every month? ›
In an RD scheme, a customer will have to deposit fixed amounts every month into the account over a predefined period of time. The amount that has to be deposited every month is known as due.
What are the disadvantages of Recurring Deposit? ›
Disadvantages of Recurring Deposit are
You cannot withdraw the money anytime you wish. You cannot change the amount you like to invest monthly once decided. It has a comparatively lower rate of interest.
Is recurring deposit good or bad? ›
RDs are one of the safest forms of investments and aren't prone to risks. In a RD scheme, you have to deposit a fixed amount on a monthly basis. SIP is better option than RDs when talked about liquidity. You can close SIP and withdraw money without paying any penalty.
What is the difference between a fixed account and a recurring account? ›
Fixed deposits are an investment scheme that one can use to invest their surplus money and earn interest at a usually higher rate than a savings bank account. RDs, on the other hand, are a financial instrument that teaches one to inculcate a habit of saving up a fixed amount of money each month.
What is the difference between recurring account and current account? ›
5. In current deposit account withdrawals are allowed throughout the tenure of the account whereas in recurring deposit account, withdrawals are not permitted until the expiry of the fixed period.
What is the difference between a recurring account and a fixed deposit? ›
What's the Difference Between Recurring Deposit and Fixed Deposit? In an RD, a fixed amount is deposited monthly, whereas in an FD, a lump sum amount is deposited for a specific tenure. RDs allow individuals to save gradually, while FDs offer higher interest rates and a fixed maturity period.
