An RD (recurring deposit) is a savings tool offered by banks. It's a great way to inculcate a habit of regular saving and earn interest on your deposits. Here's a closer look at RDs:
- Account type: Savings account with a fixed deposit structure.
- Benefits:
- Disciplined saving: Encourages regular deposits at predetermined intervals.
- Guaranteed returns: Offers fixed interest rates, providing a predictable return on investment.
- Flexibility: Choice of deposit amount and tenure to suit your financial goals.
- Security: Deposits are insured up to a certain limit by deposit insurance schemes.
- How it works:
- You choose a deposit amount and tenure (minimum 6 months, typically up to 10 years).
- You commit to making fixed monthly installments throughout the chosen tenure.
- Interest is earned on the deposit amount and compounded periodically (usually quarterly).
