A recurring deposit is a type of term deposit in which the individual is required to deposit a fixed amount each month with the financial institution. This is considered to be an ideal option for individuals who wish to improve their savings. Keeping money aside each month as savings can be a difficult venture. However, with this type of a deposit, there is a guarantee that you will deposit the amount so as to ensure you get the interest offered. The features of a recurring deposit which every individual must be aware of before investing are:
* The minimum period for which one can opt for such a deposit is six months. The maximum duration for the same which any financial institution allows is ten years.
* In case the individual does not have the time to visit the financial institution to deposit the fixed amount each month, there are other options available. One can simply have their recurring deposit funded by standing order banking which are instructions by the individual to the financial institution allowing them to withdraw the required amount for the deposit each month.
* When opening a new RD account, the financial institution informs the individual of the maturity value of the deposit. But this is only assuming that the individual makes the required payments each month. Failure to do so will reduce the interest payable on the deposit. The difference will be deducted during the maturity of the deposit.
* One of the biggest benefits of a recurring deposit is the fact that one can avail loans on it. financial institutions offer loans valued from 80 to 90 percent of the total value of the recurring deposit.
* As in the case of fixed deposits, TDS is also charged on recurring deposits. This means that interest incurred which is higher than ten thousand in one year; ten percent TDS will be deducted from it.
A recurring deposit is an extremely beneficial type of a term deposit. It helps individuals looking to increase their savings to easily meet their goals. It is also an ideal savings option as not only does one build their savings by depositing a fixed amount each month, they also get an interest on it. The interest offered on such deposits is calculated on a quarterly basis. As long as one manages to meet their deposit requirements each month, they are guaranteed to get a high interest. When opening a new RD, one must ensure that they are not ambitious and choose a high deposit amount for each month. Doing so can make it difficult for the individual to meet the monthly demands and loose a part of the interest. It is only by choosing a reasonable amount can one make the most of such an investment.