A recurring deposit is the most popular secure and low-risk investments in India. It offers an opportunity to invest without a lumpsum corpus. You get assured and fixed returns on such fund transfer. It is ideal for achieving your short-term financial goals.
Now, a typical RD account has a period ranging from six months to 10 years. You pre-decide the fixed instalments you make each month. Your RD interest rates get determined based on these aspects. However, different forms cater to needs. It is essential to understand them to benefit from them. Read on to find out:
Regular RD account: It is the most widely used form. It allows you to invest in monthly deposits for a pre-determined period. The recurring deposit interest rate you get is fixed and assured. It gets calculated as a compound or simple interest method based on the duration you choose. You can open it if you are aged 18 years or above.
RD account for senior citizens: These accounts provide additional benefits to the elderly. You can open it if your age is above 60 years. The main advantage is the higher recurring deposit rates compared to regular accounts. This rate gets compounded quarterly to result in higher maturity amount. An additional interest of 0.25 to 0.75% gets offered on this account. It is to aid the older citizens during retirement and in the absence of income.
RD account for minors: Some banks also allow citizens under 18 years to open RD account. However, they get supervised by the minor's guardian or parents. The interest rate is either higher or lower than traditional RD schemes depending on the bank. It gets converted into a standard recurring deposit once the child becomes an adult. This scheme is to gather funds for children higher education.
RD account for NRI/NRE: Banks and financial companies also offer specialised RD schemes for Non-resident Indians. You can benefit from this by opening a Non-resident ordinary or Non-resident external account. The interest on the former is taxable at 30 per cent, while the latter does not allow taxability in India. It, however, facilitates account transfer to your home country.
Flexi RD account: It lets you make investments in flexible instalments. You open the account with a core amount and add variables to it. This enables you to invest at your convenience whenever you have the availability of funds—failure in depositing the core amount results in a penalty. The same is not applicable for variables. You get the facility of tracking them through banking apps.
