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Recurring Deposit Account

What is a recurring deposit?

A recurring deposit is similar to an SIP (Systematic Investment Plan), in a mutual fund. You want to invest in a fixed deposit but do not have sufficient money to do so.

A recurring deposit is similar to a fixed deposit, only you invest small sums of money regularly which earns an interest equal to a fixed deposit.

You will have to first open a savings bank account in your bank. You deposit money into this savings bank account.

A fixed sum of money is deducted regularly (say each month), from your saving bank account and transferred to your recurring deposit.

Why invest in a Recurring Deposit Account ?
You can start small

You can start small

Find investing a large amount in fixed deposit difficult? Invest small sums of money and earn interest at the same rate as a fixed deposit.

Rate of Interest is Fixed

Rate of Interest is Fixed

The rate of interest is fixed when you invest in a recurring deposit. You are insulated from a swing in the interest rates.

Forced Saving

Forced Saving

You invest a fixed amount of money and can withdraw your money, only after a certain fixed time. You are forced to save.

Plan your Goals

Plan your Goals

You can set money aside for short-term goals such as marriage expenses, buying a car or even going on a holiday.

Eligibility for Recurring Deposit Account

If you are a resident of India, you can open a recurring deposit account. A recurring deposit at a bank can be opened with an amount as less as INR 100 a month. Some private banks require you to make a recurring deposit of at least INR 500 a month.

What is the tenure of your recurring deposit?

The tenure of a recurring deposit is a maximum of 10 years. It would be a good idea to invest your money in a recurring deposit which matches your financial goals

Interest on your recurring deposit

Many recurring deposits pay an interest rate of 8.5-8.7% a year. This interest rate can go as high as 9-9.2% a year for a recurring deposit, if you make a deposit of 1-5 years.

How to apply

You can apply for a recurring deposit account at your nearest bank branch. You have to fill the application form and submit the relevant documents.
You require proof of identity and address: passport/ driving license/ voter's identity card/ PAN card/ ration card/ recent utility bills/ credit card bill. This is necessary for the KYC (Know Your Customer), procedure.

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