Which Is Beneficial: Recurring Or Fixed Deposits?

India has long been a country that prioritises saving overspending. Therefore, most of us are aware of Fixed Deposit and Recurring Deposit concepts, mainly because they are two of the most preferred investment options. Let us look at some of the reasons why they are so beneficial.

FDs and RDs: Traditional investment opportunities

Traditional investing options such as fixed deposits and recurring deposits have been popular for years. Many modern investors put money into FD and RD regularly to offset the risks associated with sophisticated, market-linked instruments.

An investor can put aside some money into the FD for a specific time at a set interest rate. However, if you withdraw money before the minimum lock-in period gets completed, banks levy a penalty.

Monthly, quarterly, half-yearly, or annually, the interest gets either accumulated and added to the amount of the fixed deposit account or deposited to the investor's savings account. At the end of the investment term, the investor's collected interest is given to the principal sum of the FD.

You can make use of a fixed deposit calculator to know your maturity amount before investing. These are available on the banking apps too. On the other hand, a recurring deposit is a monthly investment of a defined amount at predetermined interest rates. The interest and maturity proceeds get credited in the same way as an FD.

If the interest amount for a financial year exceeds Rs. 10,000, the bank deducts a Tax Deduction at Source for both. Here, you can use a recurring deposit calculator to know what the maturity amount will be. So, you might wonder how an FD differs from RD.

Higher returns in FD

When an FD and recurring deposit are co pared, the former's maturity proceeds are likely to be higher. It is because the FD requires you to invest the entire amount at one go. As a result, the interest gets computed on a bigger sum, and the maturity proceeds end up being bigger due to compounding effects.

On the other hand, the RD account allows you to invest a set amount of money monthly. As a result, while the first instalment receives interest for the whole 12-month period, the second instalment only earns interest for the first 11 months. As a result, the interest earned here is lower than the FDs.

More flexibility in RD

FDs are the best option for you if you have significant money to invest. On the other hand, RDs are a great choice if you want to develop a safe pool of assets. In addition, with consistent monthly commitment, you can set specific, short-term goals, such as paying annual school fees or saving for a major family event.

A Detailed Guide On The Facilities Offered Under Online Savings Account

Today, all public and private sector banks offer savings account. You can use them for parking and growing your savings gradually. The moment you begin earning, you can open the account if you do not hold one. While some organisations do offer an account for depositing the salary, consider opening a regular one with which you can enjoy a host of benefits. Thanks to digital banking, you can open an account in minutes online. 

Here are some of the most generic facilities which banks offer on online saving account opening: 

Usage of account for daily transactions 

The essential feature of the account is it lets you conduct all types of daily transactions. There is no upper cap on the sum you can deposit in the account. Deposit the money through cash, cheque, or online transactions through various accounts. However, banks have a daily withdrawal limit on such accounts. Generally, the withdrawal limits are higher when you remove cash from the bank branch than the ATM. 

Provides ATM or debit card 

All Indian banks offer an ATM or debit card in the saving account welcome kit. The ATM card includes your name, a 16-digit code, and the expiration or validity date on the front, while the CVV number with the signature strip on the back. You use the ATM card for withdrawing funds from any ATM vestibule. However, you should check the number of transactions possible through ATM, be it home bank or otherwise. 

Besides withdrawing cash at the ATM, use the card for shopping at retail stores and online portals. You can use them for paying the utility bills as well. 

Net banking services 

You already have opened the account online. Now, you can explore more opportunities here. You can do transactions often, check your account balance, download the bank statement, transfer funds through NEFT, RTGS, or IMPS modes. You have the provisions to pay the utility bills, house rent, loan EMIs, and other monthly expenses directly through the account. You can even set up login details in the banking apps for on the move transactions. 

Earn interests on the savings 

Every bank offers savings interest rates on the balanced parked. The interest rates offered are generally not too high, but you can earn higher interest rates under the online mode. It is also applicable for those who have maintained higher deposits in the account, usually exceeding Rs. 1 lakh. The interest rates offered ranges between 4% to 7% depending on the bank and the savings. The interest pay-out also happens on a half-yearly or yearly basis. 

When you open the saving bank account, enquire about the different accounts you can open. Apart from the standard account, there is a joint account, zero-balance, accounts under various Government schemes, women, senior citizens, and minors.