What is a recurring deposit?

Recurring Deposit is a saving cum investment option for those who want to save a fixed sum of money regularly and earn some interest on it. Usually recurring deposit has a fixed tenure generally ranging from 6 months to 10 years, so individuals can choose a tenure as per their goals. Every month a fixed sum of money is deducted from your saving bank account and gets transferred to your recurring deposit account. On maturity the depositor accumulates a handsome amount along with the interest earned. For senior citizen’s extra benefits in the form of higher interest rates, generally 0.25 – 0.75% additional interest is given.

Features of a recurring deposit account

Guaranteed returns:
Recurring deposit account assures guaranteed returns. The returns are pre-determined and there is no risk attached to it which makes it extremely safe.
Minimum amount:
Find investing a large amount in fixed deposits difficult? Invest small sums of money every month and earn interest at the same rate as a fixed deposit
Withdrawals of the amount in recurring deposits attracts a penalty. Interest would be paid only for the period the money remained with the bank. The penalty amount is usually around 1%.
Loan against recurring deposit:
Banks do not offer partial withdrawal of money but provide Loan against recurring deposit for an amount up to 90% of the deposit value.
Standing instructions:
Customer can also give standing instructions to the bank to credit the recurring deposit account every month from his/her savings or current account.
Flexible recurring deposit:
Few banks also offer flexible recurring deposit where the customer does not have to deposit a fixed amount but can invest flexible sum of money according to their convenience.