What is a Recurring Deposit (RD)?
A Recurring Deposit is a term deposit offered by banks that helps people with regular incomes to deposit a fixed amount every month into their recurring deposit account and earn interest at the rate applicable to regular Fixed Deposits.
Pro Tip: Setting up an auto-debit instruction aligned with your salary date takes out the emotional effort required to save consistently.
Why open an RD?
- Disciplined Saving: Perfect for creating a forced savings habit from a month-to-month salary since it mandates a set deposit.
- No Lump Sum Needed: Unlike an FD which requires thousands up front, an RD lets you earn similar interest rates started with as low as ₹100/month.
- Risk-Free Accumulation: The accumulated corpus does not swing wildly like mutual fund SIPs, providing mental peace.
- High Capital Safety: Insured up to ₹5 lakh by DICGC per bank per individual.