A Recurring Deposit, commonly known as RD, is a special kind of term deposit offered which help people with regular incomes to deposit a fixed amount every month into their recurring deposit account and earn interest at the rate applicable to fixed deposits.
It is an investment tool which allows people to make regular deposits and earn decent returns on the investment. Due to the regular deposit factor and an interest component, it often provides flexibility and ease of investments to users/individuals.
However, it is essential to know that RDs are different from Fixed Deposits/FDs . RDs are flexible in most aspects. An RD account holder can choose to invest a fixed amount each month while earning decent interest on the amount. RDs are an ideal saving-cum-investment instrument. Recurring Deposit schemes aim at inculcating a regular habit of saving in people
Features of a Recurring Deposit Account
You could invest with an amount as small as Rs. 500/-
The minimum period of deposit is 1 year, while the maximum period of a deposit is 5 years
The rate of interest is equivalent to that offered for a Fixed Deposit. Therefore, the interest rates are higher than Savings Account.