The miracle of using recurring account-best interest rates

RD is Recurring Deposit which is offered by various banks in the country India. It helps individuals to deposit a minimum amount which is fixed on a monthly basis. The amount is deposited in the Recurring Deposit account and interest is earned at the Fixed Deposit rate. The process is equivalent to creating an FD account where an individual has to pay the installments monthly, for example, ₹ 500, ₹ 1000 or ₹ 2000 every month. The deposit is matured on the given date with all the monthly deposit made. The savings is build up through monthly deposits on the regular basis on a fixed amount and over fix time.

Benefits of a Recurring Deposit

  • Ideal for individuals with a stable and regular income who may not be competent to spare adequate amount of cash to open an FD account.
  • Facilitates you to deposit money on a regular basis instead of a one-time payment at the time of opening.
  • It is for a prearranged fixed tenure that can vary from some months to many years.
  • Enables ongoing, regular savings.
  • Provide a higher rate of interest in comparison to a savings bank account, such as an FD, but with a tiny ongoing investment.
  • Facilitates premature withdrawal at the time of necessity.
  • Has a comparatively low return than other forms of investment, however it is secure.
  • Is a low-risk and secure form of saving.

More about recurring deposit

Whenever the RD account is created the value (maturity) is declared to the customer or the individual according to the monthly installments which will be produced on monthly basis.

  • The monthly amount should be deposited on a regular basis and the interest is delayed then the interest will be minimized.
  • The time period of RD is minimum 6 years and maximum 10 years.
  • The interest (difference) will be deducted as a penalty if the amount is not deposited on time.
  • The penalty rate is fixed and the interest is compounded on the recurring deposits account.
  • The loan can be availed on the Recurring deposit account. It is up to 80 or 90% of the deposited value.
  • The Rate of interest is equivalent to the FD (Fixed Deposits).

Taxation

  • If the interest exceeds a certain amount i.e. ₹ 10,000 IN a single year then tax is deducted from the RD account which is Tax deducted at source.
  • Income tax also needs to be paid on the earned interest from the RD account of the account holder.
  • If the account holders have no taxable income then they need to submit 15G form on the recurring deposits and the fixed deposits accounts.

Interest rate calculation

  • The rate of interest of the recurring deposits (scheme) is calculated on elements like money deposited every month, the scheme that the individual chooses (RD) and the tenure.
  • The interest rate is beneficial whenever the investor invests for the period 15 months to 24 months.
  • For the senior citizens and women, higher interest rates are offered for the RD bank accounts.
  • Also, online RD calculator is available for calculation of interest rate that the individual saves for the principal amount and the tenure.

Recurring deposits interest rates

The banks like Deutsche and Nainital offer the rate (7.25% and 7.50%) for the time period of 5 years.
  • The interest rates are (7.50% and 7.75%) for the banks like Nainital and DHFL for the time period of 1 year.
  • The Interest rate of Nainital bank is (7.90%) for the period of years.
  • Similarly, the banks like Nainital, Laxmi Vilas Bank, and Karur Vysya Bank offers the highest interest rate of (7.75%, 7.00%7.00%) for the time period of 3 to 4 years.
  • The Post office presents with the interest rate of (7.10%) for the recurring deposits scheme.
Best Interest rates offered by various banks:
  • Andhra bank offers the interest rates 6.50% for 1 year, 6.50% for 2 years, 6.25% for 3 years, 6.25% for 4 years, 6.25% for 5 years and 6.25% for 5+ years.
  • Allahabad bank offers the interest rates 6.50 for 1 year, 6.60 for 2 years, 6.50for 3 years, 6.50for 4 years, 6.50for 5 years and 6.50 for 5+ years.
  • ICICI bank offers the interest rates 6.75 for 1 year, 6.75for 2 years, 6.50for 3 years, 6.50for 4 years, 6.50for 5 years and 6.50 for 5+ years.
  • HDFC bank offers the interest rates 6.75 for 1 year, 6.25for 2 years, 6for 3 years, 6for 4 years, 6for 5 years and 6.50 for 5+ years.
  • J&K bank offers the interest rates 6.25 for 1 year, 6.75 for 2 years, 6.50for 3 years, 6.25for 4 years, 6.25 for 5 years and 6.25 for 5+ years.
Prior to opening an RD account, you necessitate doing the research on the interest rates provided by the different banks for the diverse tenures. It is straightforward to look up the rates on recurrent deposit on the websites to evaluate which banks are providing the highest and beneficial interest rates. Generally, most banks provide interest rates between 7-8% annually, as mentioned above, with variations depending on the tenure and amount. Some banks, like The Ratnakar Bank and Bandhan Bank, offer interest rates more than 8% every year on RDs. Again, it is imperative to stress that interest rates can modify at any time, therefore it is imperative to research the most recent rates on the websites of banks when you are making your mind to open an RD account.