Recurring Deposit Interest Rates

Recurring Deposits (RD) are a popular savings instrument in India, offering a disciplined way to save money while earning attractive interest rates. With the flexibility to deposit a fixed amount monthly and earn assured returns, RDs cater to individuals looking for a secure and reliable investment option. This article provides a comprehensive guide to understanding RD interest rates, their benefits, and how to calculate returns.

Recurring Deposits allow individuals to save systematically while earning fixed interest on their deposits. Banks and financial institutions offer RDs with varying interest rates, typically ranging from 4% to 8% per annum, depending on the tenure and the depositor’s category, such as senior citizens or minors.

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Recurring Deposits (RDs) offer a disciplined approach to saving regularly while earning steady returns over a fixed tenure. By committing to a fixed monthly deposit, investors can gradually build a substantial savings corpus over time. You can open a Recurring Deposit account through NetBanking, Mobile Banking, or by visiting the nearest bank/post office branch.

Key Features of a Recurring Deposit Account

• Invest small amounts monthly and earn interest comparable to Fixed Deposits
• Safe investment option unaffected by market fluctuations
• Interest rate remains fixed for the entire RD tenure
• Receive a lump sum amount upon maturity
• Consistent rate of return, even with monthly instalments
• Flexible tenure options
• Deposit amounts starting from Rs. 500, in multiples of Rs. 100, up to Rs. 2.99 crore (but this can vary between RD providers)
• Option for premature closure available
• No penalty on early withdrawal (subject to RD provider's policy)
• Convenient online account opening and management (subject to RD provider's policy)

If you ever plan to withdraw your RD savings, you can secure your financial future by reinvesting the amount in a Bajaj Finance Fixed Deposit. Open an FD account and get up to 7.30% p.a. returns. 

The interest earned on an RD is calculated using the compound interest formula. The formula is:

The formula for RD maturity is: A = P*(1+R/N)^(Nt)

Where:

This formula serves as the universal method for calculating RD maturity amounts, irrespective of the invested amount or the investment duration. All that's required is to input the specific values.
 

For example, let us calculate the maturity amount of an RD considering the monthly deposit amount of Rs. 7,000 and an interest rate of 8.50%.

Using the above mentioned formula, here A will be the “Maturity Amount”, P will be “Monthly RD Instalment” (Rs. 7,000), N will be “Compounding Frequency” (number of quarters), R will be “RD Interest Rate” (8.50% or 0.085) and T will be “Tenure” (1 year, equivalent to 4 quarters).

Hence,

A = P*(1+R/N)^(Nt)
= 7000*(1+0.085/4)^(4*12/12)
= Rs. 7,671.40

A = P*(1+R/N)^(Nt)
= 7000*(1+0.085/4)^(4*11/12)
= Rs. 7,521.88

A = = P*(1+R/N)^(Nt)
= 7000*(1+0.085/4)^(4*1/12)
= Rs. 7,049.37

For this specific investment scenario, summing up this series, the total maturity value, i.e., A, equals Rs 85,947.42.

Manually solving such equations can be quite challenging. A Recurring Deposit Calculator swiftly provides you with the exact figure in seconds.

Premature withdrawal of RD

Premature withdrawal is allowed but may attract a penalty. The penalty amount varies across banks and usually involves a reduction in the applicable interest rate.

Partial withdrawal of RD

Some banks allow partial withdrawal of RD funds to meet urgent financial needs. However, this facility may come with restrictions on the amount and frequency of withdrawals.

Tax exemptions of an RD

The interest earned on RDs is taxable under the Income Tax Act. TDS (Tax Deducted at Source) is applicable if the interest exceeds Rs. 40,000 in a financial year (Rs. 50,000 for senior citizens).

To reduce your tax liability and grow your savings, consider investing in Bajaj Finance Fixed Deposits. With competitive rates and tax-saving features, it’s a smart alternative to maximise your returns and financial security. Invest now.

Recurring Deposit schemes are tailored to suit different needs and demographics. Here are the common types:

Regular RD savings scheme

This is the standard RD option, available to all individuals. It offers fixed interest rates and flexible tenures, making it ideal for salaried professionals and small business owners.

RD schemes for minors

These accounts can be opened by parents or guardians on behalf of minors. They help inculcate a habit of saving in children while earning competitive interest rates.

RD schemes for senior citizens

Senior citizens enjoy higher interest rates on RDs, typically 0.25% to 0.50% more than regular rates. This makes RDs a preferred choice for retirees seeking stable returns.

NRE/NRO recurring deposit schemes

Non-Resident Indians (NRIs) can open NRE (Non-Resident External) or NRO (Non-Resident Ordinary) RDs to save in Indian currency. These accounts offer attractive interest rates and tax benefits under specific conditions.

Special recurring deposit schemes

Some banks offer special RD schemes with higher interest rates or additional benefits for specific tenures or customer categories.

For those looking to complement their RD savings and enjoy even higher returns, Bajaj Finance Fixed Deposits provide an excellent option. With flexible tenures, competitive interest rates, and secure investments, it’s the perfect step to enhance your financial portfolio, explore FD options.

Recurring Deposits are a reliable and secure way to grow your savings. With assured returns, flexible tenures, and minimal investment requirements, RDs cater to a wide range of financial goals. Whether you are saving for a short-term expense or building a long-term corpus, RDs provide the stability and predictability you need.

You can also consider Bajaj Finande FDs for either short-or long-term savings. Invest in AAA rated FDs now! Check rates.