You must have heard people talking about placing their trust in a recurring deposit account. But do you know what is recurring deposit account? No? Don’t worry, let me explain it in simple words for you.
What is Recurring DepositA recurring deposit simply means making regular deposits. It’s a service offered by several banks where one can make regular deposits and get good returns on their investments.
What is Recurring Deposit AccountA recurring deposit account means a postal service or banking account in which you put some amount of money every month for a particular period of time (commonly spanning from 1-5 years). It is suitable for those who want to put down a set amount each month with the goal to receive a payout after a couple of years.
Characteristics of Recurring Deposit (RD)The objective of RD schemes is to inculcate a habit of saving money among people.
The minimum period of deposit generally begins at 6 months and the maximum period of deposit is 10 years.
The minimum amount that you can deposit varies from one bank to another. The amount can be as small as Rs. 10/–.
The rate of interest is the same as provided for a Fixed Deposit and is higher than savings schemes.
Mid-term and premature withdrawals aren’t allowed by some NBFCs and banks after charging a penalty while some do not allow mid-term or premature withdrawal.
Recurring Deposit provides an additional benefit of availing a loan against the deposit, i.e., by using the deposit as collateral. Generally, you can get about 80-90 percent of the deposit amount as a loan. It varies from one lender to another.
The RD can be funded periodically through Standing Instructions which are the instructions given to the bank by the customer to credit the RD account every month from their Current or Savings account.
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What is recurring deposit?
Heetal
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2022-03-23T18:07:11+00:00 2022-03-23T18:07:15+00:00Comment
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