The term Recurring Deposits or RD denotes a facility provided by several banks and NBFCs these days, in which the account holder has the flexibility and ease to deposit money on monthly basis and get lucrative returns. Further, when an RD account is opened in a bank, the holder can easily start by investing a small amount of money.
Recurring Deposit permits the holder to multiply and amplify the investments faster than any saving deposits that, too, without putting the weight of a one-time lumpsum deposit. Further, a Recurring Deposit offers flexibility both in terms of payment and tenure. That means one can select from either short-term and long-term tenure and from anywhere between 90 to 10.
Also, at the time of maturity, the account holder will receive the whole of the invested amount, together with the accrued interest. Therefore, opening an RD account is the best saving option for those who have small earnings.
Through this learning blog, we are aiming to provide you with the significance of opening a Recurring Deposit Account and the benefits associated with it.
How to Open RD Account Online?
The steps involved in the process to open a Recurring Deposit Account online are as follows:
- In the first step, start the net banking facility in your bank account;
- After starting the net banking facility, visit the official website of the bank and log in to your respective account by using the registered username & password;
- Now choose the option available for opening a Recurring Deposit Account;
- In the next step, fill in the registration application form and choose the required details, such as the Tenure, Monthly Deposit Amount, etc.;
- Lastly, when the application form is successfully submitted, the recurring start will be opened to start investing;
Also, it shall be noted that after submitting the above-mentioned details, the account holder needs to link his/ her savings account with the RD account for an easy every month transfer of funds to the RD.
Eligibility Criteria to Open a Recurring Account Online
It shall be noted that everyone needs to fulfill certain eligibility criteria to succeed in investing in a recurring deposit. However, the criteria for the same may differ from one bank account to another. Though, the common criteria are listed below:
- Every adult individual is eligible;
- Minors above the age of ten years are eligible, but it shall be noted that name proof is a must in each case;
- It shall be noted that minors who are equal to or below the age of 10 years are qualified to apply for RD Account but under the guardianship of a natural or legal guardian;
- Any company, commercial organisation, proprietorship business structure can open a Recurring Deposit Account;
- Any Government Organisation can apply for opening a Recurring Deposit Account;
Benefits of Opening a Recurring Account Online
Recurring Deposit or RD is a good investment structure for those who want significant returns on their small investments. That means one can earn a high interest rate similar to that in Fixed Deposit without having to recompense the total investment amount at a time.
Further, the key benefits of opening a Recurring Account Online are as follows:
- Investment Flexibility : Recurring deposits permit an account holder to make monthly deposits all over the tenure based on his/ her convenience. That means a person can select the amount that he/ she can afford and endure to save his/ her money without overpowering the monthly expenses.
- Guaranteed Returns: Recurring Deposit or RD is a risk-free and hassle-less investment option, which provides guaranteed returns on the deposited amount being multiplied with interest all over the deposit tenure. Further, it shall be noted that the interest rates are not dependent to the market inflations, and therefore, investors will be able to earn more interest that, too, at the same interest rate promised while opening the Recurring Deposit Account.
- High Interest Rates: Recurring deposits provide higher rates of interest than savings accounts. Therefore, opening a Recurring Deposit Account is better to earn interest on the investments.
- Flexibility in Tenure Deposit: Banks permit the opening of recurring deposits for a variable range of tenures, starting from the tenure of 6 months to going up to 10 years. That means one can easily select a tenure based on his/ her financial goals.
- Easy Withdrawal Facility: The Recurring Deposit can be easily dissolved anytime just by withdrawing the balance amount in the account. It, therefore, confirms the liquidity of cash at the time of need. Further, it shall be noted that banks, might charge a nominal fee known as the foreclosure fee for the closing of deposit before maturity.
- Easy Loans against Recurring Deposits: By opening a Recurring Deposit Account one can easily obtain a loan against his/ her recurring deposit balance. Further, one can take a loan of up to 95 percent of the total deposit dependent on the bank he/ she has invested in.
In a nutshell, Recurring Deposit is one of the safest and secure ways to invest your savings. Further, one can easily start investing in an RD by opening a Recurring Deposit Account at the respective chosen bank.
Furthermore, one has to deposit a pre-determined amount of money every month for a preferred tenure. After that, interest will be accrued based on the interest rate provided by the bank on term deposits and in accordance with the deposit tenure.
Lastly, at the conclusion of the Recurring Deposit tenure, one will receive the total deposited amount, together with the interest earned as returns.