Question 1

What is a Recurring Deposit (RD)?

Accepted Answer

RD is a savings scheme where you deposit a fixed amount monthly for a predetermined tenure. It's ideal for building savings habits and earning interest on regular deposits.

Question 2

How is RD interest calculated?

Accepted Answer

RD interest is calculated using the formulae based on compounding frequency (monthly, quarterly, half-yearly, or yearly). More frequent compounding results in higher returns due to earning interest on interest.

Question 3

What are the advantages of RD?

Accepted Answer

RD offers flexibility, capital safety, guaranteed returns, no lock-in period constraints, and encourages disciplined savings. It's suitable for individuals saving for specific goals over medium-term periods.

Question 4

Can I adjust my RD deposit amount?

Accepted Answer

Most banks allow modification of RD amount, though some may have minimum limits. You can increase deposits to save more, or decrease in case of financial constraints. Check your bank's policy.

Question 5

Is RD better than savings account?

Accepted Answer

Yes, RD offers higher interest rates (typically 3-5% vs 2-3% for savings accounts). However, funds are locked for the tenure. Choose RD if you don't need immediate access to funds.

Question 6

What's the penalty for premature closure?

Accepted Answer

Most banks charge 1-2% penalty on accumulated interest for premature RD closure. Some banks may waive this for senior citizens. Check your specific bank's terms before opening an RD.

Recurring Deposit Calculator

Recurring Deposit Calculator Tool

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