Among the various low-risk investments that provide assured returns, a Recurring Deposit is one. It is a popular investment scheme in India and is offered by multiple banks and non-banking financial companies. An RD can help you create a habit of saving and offer various other benefits. However, if you are unaware of them, this article could prove helpful. Here, we will discuss what an RD is and unveil its various advantages.
About RDs
A Recurring Deposit or RD refers to a type of Term Deposit. It lets you save and deposit money at regular intervals, enabling you to earn decent returns. RD provides interest on the amount you invest at a fixed rate. This rate of interest does not change during the deposit tenure. Upon maturity, the bank pays you a lump sum amount. This sum includes the regular deposits along with the interest you earn.
Today, you can easily open an RD using the Banking app. When opening this deposit, you can choose a term based on your needs. Typically, the term ranges from 91 days to 10 years and may vary across banks.
Benefits of RDs
An RD offers various benefits. These include the following:
- No change in interest rate
When you open an RD, the RD interest rates remain fixed throughout its tenure. This is irrespective of changes in the bank’s policies regarding the interest rates offered or alterations in the market trends. Hence, you can be assured of a fixed rate when you open an RD.
- Lets you start small
While the minimum deposit amount could vary across banks, some let you start your RD with just Rs. 100. Hence, even with a lower income, you can build your savings. The smaller deposit amount also prevents you from compromising your current needs.
- Good for fulfilling goals
Since it is risk-free and offers assured returns, you can open a Recurring Deposit Account to fulfil your short-term and long-term goals. For example, you can use this investment to plan a vacation, renovate your home, upgrade your phone, buy a new gadget, and more. You can also use it to grow your savings systematically.
- Save in instalments
If you do not have a lump sum amount to invest and your expenses leave you only with a small amount to save, you can deposit them in an RD. RDs also usually offer a higher interest rate than most ordinary Savings Accounts. Hence, you can open an RD and deposit funds in it at regular intervals. This way, you do not keep the money idle in your Bank Account.
Conclusion
As evident, an RD offers various advantages. So, if you want to enjoy these benefits, you can conveniently open an RD online using the Mobile or Net Banking platforms provided by your chosen bank.
