What Benefits Does A Recurring Deposit Account Offer?

[Shashank Bhaskar]

People find it tough to save a fraction of their regular income monthly. It becomes difficult because you have the habit of spending more on what you want than just what you need. Most of the time, you end up spending your savings on something. Hence, Deposit Accounts come to your rescue in such situations.

A Recurring Deposit is a financial product offered by banks. Each month, you deposit a fixed amount if you earn regular income. It encourages you to safeguard your wealth and earn interest at the applicable rates. It is a wise investment tool for salaried employees and individuals with fewer investment amounts.

The investment amounts

The main difference between this and the Fixed Deposit is that the latter requires you to invest a lumpsum amount and credits the interest to your Savings Account at fixed intervals. The convenience of investing, along with the safety of your deposit, helps you plan your goals quickly.

The minimum investment amount for an RD Account is Rs. 1,000. If you plan to open the account with an existing bank, you can link it to the Savings Account without submitting documents. The deposit amount is never subject to market risks. You also need not pay penalties for late or missed payments.

Benefits

If you open the Recurring Account, you receive plenty of benefits as an account holder. It is also another popular investment instrument in India.

Investment tool

The most significant advantage of a Recurring Deposit Account is that you need not deposit a large sum. People earning less income find it beneficial as it does not cause a financial burden on them.

High interest

Though you need not manage a lumpsum amount for starting the account, you are entitled to receive interest according to the FD interest rates. Some banks offer higher interest on periodic Deposit Accounts than Savings Accounts. You receive the interest amount and the accumulated sum at the end of the tenure with compounding.

Little monthly savings

When you open RD online, you encourage the saving habit despite a limited fixed salary. Not everyone has the financial freedom to save a hefty amount over an extended timeframe or at a single go. You save a meagre amount monthly to receive impressive returns upon maturity.

Online facility

Banks have revolutionised their systems by offering banking apps to all their customers. You need to download it from the respective smartphone app store or log on to the website. Enter your login details (username and password) and select the desired Deposit Account from your smartphone. You can also check your account balance, transfer funds, and pay bills through these services.