A recurring deposit (RD) is a financial tool offered by many Indian banks. It helps users to save money by making regular and fixed deposits over a set period.
Recurring deposits benefit individuals who wish to save for specific short-term goals such as buying a house, funding education, buying smartphones, planning a vacation, etc., without requiring a high initial investment.
Banks offer competitive recurring deposit interest rates compared to other investment offers. They provide a secure and predictable way to grow your savings.
About recurring deposit
A recurring deposit (RD) is a savings plan provided by Indian banks and the India Post. It lets individuals make regular deposits and earn interest over a set period. Unlike fixed deposits (FDs), RDs offer more flexibility and can be ideal for saving and investing.
Recurring deposits (RDs) are useful for saving towards specific goals, such as a home down payment or your child's education. By setting aside a small part of your regular income into an RD, you can benefit from higher interest rates, helping you accumulate more savings over time.
Also Read: Everything You Need To Know About Tax On Recurring Deposit
Achieving financial goals with recurring deposits
RDs are considered a safe investment as they are offered by banks which are regulated by the government. It makes them low-risk compared to market-linked investments. You must follow certain steps to achieve your financial goals with recurring deposits.
Identify your financial goals
It is the first step before investing in a short-term recurring deposit. You must determine what you are saving for, whether it is a down payment on a home, your child's education, a vacation, or an emergency fund. Then, set an amount and select the tenure.
Users can start investing in Kotak811’s RD with just Rs 100 and a maximum of Rs 1 Lakh. The minimum tenure is 6 months, and the maximum tenure is 120 months.
Select the ideal RD plan
You must consider various factors, such as the duration of the RD, interest rates, and any penalties for early withdrawal. Kotak811 offers competitive recurring deposit interest rates – 7.40% for general citizens and 7.90% for senior citizens.
If you withdraw your RD before it matures, the interest you earn will be based on either the rate that was in effect when you deposited for the period it was with the bank or the agreed-upon rate, whichever is lower. Moreover, a 0.5% penalty fee will be deducted from your interest earnings for the early withdrawal.
Calculate monthly deposits
The best way to calculate the monthly deposits is by using an online recurring deposit calculator. It is the most convenient tool for users to determine which deal suits them best. It helps manage their finances and make monthly budgets based on their payment schedule.
Follow these steps to calculate monthly deposits.
- Select whether you are a general or senior citizen
- Enter your deposit amount ranging from Rs.100 - 1 Lakh
- Select the tenure ranging from 6 months to 120 months.
For example, if you select a general citizen (6.00%), the monthly deposit is Rs.10,000, and the tenure is 6 months, you will earn Rs.61,053.
Also Read: Difference Between Mutual Funds & Recurring Deposits
Set up automatic payments
Investors must make regular deposits in their RD accounts to avoid any penalties. If you miss an RD instalment payment and do not pay within a 5-day grace period, you will be charged a penalty.
This penalty is the RD interest rate (agreed upon when the RD was opened) plus an additional 2% per year or any other rate the bank may set. This penalty applies for each month the payment is delayed.
Regularly monitor your RD
You must keep track of your RD account regularly to ensure that deposits are being made correctly and to monitor the interest accrued. You may also adjust your savings plan if your financial situation changes or you receive unexpected income that you can add to your RD.
Tip: When your RD matures, you can either reinvest the amount in another RD or use it to meet your financial goal. Reinvesting can help you continue to earn interest and grow your savings further.
By investing in RD, you can buy your dream items, gift your loved ones their favourite products, buy yourself a new smartphone or go on a trip and tick it off your bucket list. Follow the steps above to achieve all your short-term recurring deposit goals.
Benefits of investing in an RD
Recurring deposits (RDs) can be a good investment option for people who want to save and earn money to reach their financial goals. They offer several advantages, including:
Higher interest rates: RDs typically offer higher interest rates than savings account, and the interest is compounded quarterly.
Flexible tenures: RDs offer more flexibility than fixed deposits. You can invest as low as Rs.100 and choose a favourable tenure.
Easy to open: RDs are generally easier to open than fixed deposits.
Withdrawals: You can usually withdraw money from an RD at any time without penalty, and you will still receive interest calculated up to the date of withdrawal.
Financial planning: RDs can be a good way to save for specific goals, like a down payment on a home or your child's education. You can deposit a small portion of your regular income into an RD, and the higher interest rate can help you save more.
Features of Kotak811 recurring deposit
Kotak811’s Recurring Deposit (RD) account has several features, including:
Deposit duration: The term can range from 6 months to 10 years, in multiples of 3 months
Minimum deposit: The minimum deposit amount is Rs.100.
Interest rate: Senior citizens receive an additional 0.5% interest rate over the regular rate
Premature withdrawal: Premature withdrawals are permitted but come with a penalty. Check out the recurring deposit fees & charges to avoid any inconvenience.
Partial withdrawals: Partial withdrawals are not allowed
Cumulative RD: With this account, interest is accrued periodically and can be paid out along with the deposit amount at the end of the term
Online: You can open an RD account online.
Eligibility: To open an account, you must be an Indian resident, including minors and HUFs, and have a savings account with Kotak811.
Give your dreams a boost by investing in an RD and achieving your short-term goals.
Popular Searches on Kotak811
Kotak811 | Kotak811 Insights | Upgrade To Super Savings Account | Super Savings Account Fees And Charges | Zero Balance Account Opening Online | Lifetime Free Credit Card | Apply for Image Debit Card | ActivMoney Savings Account | Apply for Online Savings Account | Savings Account Fees and Charges | Apply for Current Account Online | Check Your CIBIL Score | Reactivate My Dormant Account Online | Digital Savings Account | Instant Personal Loan Online | Fixed Deposit Guide
This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
Share
