A Recurring Deposit is a distinct and traditional financial instrument offered by banks in India. It is essentially a Term Deposit and an effective investment tool that allows individuals to deposit funds at intervals to earn good returns on the investment. As a result, Recurring Deposits offer the flexibility of easy investments and enable you to earn fixed and guaranteed returns free from market risks.
Before investing in an RD, you need to research different interest rates banks offer. You will prefer investing in a bank offering the highest interest rates if you plan to save for significant purchases, such as a smartphone or any gadget. You receive the interest income periodically throughout the tenure, either monthly, quarterly, or half-yearly.
Features of RDs
There are many choices available to help you invest your capital today. It all depends on your financial goals and the kind of investor you are. In case you have a low-risk tolerance level, you can opt for an RD, offering investors opportunities to deposit a fixed sum every month. Most banks offer these to customers online and offline. Tenures may range from six months to 10 years.
Generally, Recurring Deposit interest rates can range between 2.90% to 7.25% for every year if you are a general customer. For senior citizens, the rates are slightly higher, ranging from 0.50% to 0.80%.
What are the eligibility criteria?
If you are eager to open an RD at a bank, you can log on to the Internet and Mobile Banking applications, select the type of deposit you want to open, check the interest rates, terms, and tenure, and enter the investment amount, which will be debited directly from your linked Savings Account. The basic eligibility criteria are:
- You need to hold an Indian citizenship
- Minors can also open RD Accounts under the guidance of their guardians
- You need to provide all required documents for KYC clearance
- Organisations are also eligible to open Recurring Deposits
How to calculate your returns on investment?
An RD is a continuous investment. Tracking any returns earned on it can be challenging for investors. Any RD's interest is accrued every quarter, which is compound interest. Calculations can take on manifold aspects as there are different variables involved. The RD interest calculator can eliminate the problems of calculating returns manually.
An investor learns what interest deposits can accrue in a relevant tenure using this tool. In this way, investors know how much to invest. You need to enter the instalment you deposit each month, the interest accrued, and the tenure. The tool automatically computes the amount of interest collected by the maturity date.
Conclusion
Gain financial awareness by using the right tools before investing in financial products. You can access this calculator online anytime without restrictions.
