RD Account Explained: Benefits & How to Open a Recurring Deposit

All you need to know about an RD account
 

Recurring Deposit accounts have been around for a while, and their popularity has not diminished. Many people of varied age groups would happily place their trust in an RD account. So, what is a Recurring Deposit account and why is it so popular? Let’s find out.

What is an RD account?
 

A recurring deposit means making regular deposits. It is a service provided by many banks where people can make regular deposits and earn decent returns on their investments. Now what is a recurring deposit account, you may ask?

The recurring deposit Plan's process of making small monthly savings allow the user to build up an appealing sum at maturity. The Recurring Deposit interest rates are calculated on a quarterly compounded basis. 

How does a Recurring Deposit account work?
 

An ordinary fixed deposit implies that a person sets aside a sum of money that can be withdrawn after a set length of time. Meanwhile, you are unable to alter the sum of the money or possibly supplement it.

The recurring deposit account follows a similar procedure with one primary difference. Instead of investing a lump sum, you should deposit a specific amount into your account each month, which you determined when you opened your RD account. This could be a tiny sum that won't completely empty your wallet. And when the sum matures, you'll have a large sum in excess of your principal, plus interest.

What is the procedure to open a Recurring Deposit account?
 

You can create an RD account by going to any bank/post office and filling out the form. After which, you will have to provide additional formal documents like a PAN card and proof of residence, and pay the first month's amount to the bank/post office.

A Recurring Deposit account can be opened for as little as 6 months or in multiples of 3 months, with the longest term being 10 years. The interest rates offered by a Recurring Deposit are similar to those offered by fixed deposits. If you are a senior citizen, you will be given a 0.5 percent extra rate of interest, similar to India Post, and certain banks will also give you a buffer period of roughly 5 days.

Some institutions such as IDFC FIRST Bank give you the option of opening an RD online. In a few simple steps, you can open a RD account with IDFC FIRST Bank via Mobile Banking. Enter basic information such as your name, email address, and mobile number to open your Recurring Deposit account online.

How to open an RD Account online?
 

You can open a recurring deposit account in various modes of operation. Here is how to open it online:

• Open IDFC FIRST Bank Mobile Banking App if you already have a bank account with IDFC FIRST Bank.
  
• Locate the option to open a recurring deposit account. 
• Select the account from where the investment amount has to be debited from
• Enter the monthly Deposit amount
• Select on Best Plan to get the most suitable plan Or, select All Plans to select a plan of your choice
• That’s it! Click on Create RD to finish the process

Now enjoy the features of a recurring deposit account and watch your savings grow over time.

How to open an RD Account offline?
 

All you need to do is go to the nearest IDFC FIRST Bank branch and collect the recurring deposit account application form. After that:

• Fill in your personal and RD details such as your name, address, RD tenure, instalment amount, and nomination details. Double check the information provided in the form for accuracy.
  
• Now, put in your bank account details.  
• Read the terms and conditions of the RD agreement and sign it.
• A bank representative will process your application and open the RD within the stipulated time.

Opening a recurring deposit account, even offline, is a simple process, and the bank's personnel are available to assist you in every step of the way. Now leverage the exclusive features of recurring deposit account to save regularly, earn interest, and build wealth over time. 

Is it possible to break the deposit before the stipulated time?
 

Yes, it is possible to terminate a recurring deposit. That is something that the bank or post office cannot refuse. However, because you are not allowing the recurring deposit to conclude its term, the bank/post office has the right to keep/cancel the interest that has not been paid. You may receive the amount you invested, but you will not receive any interest. Multiply your earnings within minimum duration of 6 months. Apply Now

What is a Recurring deposit minimum amount?
 

RDs have a six-month minimum deposit period and a ten-year maximum deposit period. Recurring Deposit accounts pay a higher rate of interest than savings accounts. Banks usually compound interest once each quarter. RD accounts have a lock-in period of 30 days to 3 months, depending on the bank.

With competitive interest rates, no penalty on missing instalments and easy online access, IDFC FIRST Banks’s Recurring Deposit account is one of the better RD accounts you can open today. To open an RD, visit IDFC FIRST Bank website or call the customer care on 1800 10 888 for guidance on the application process. Visit our website to get more information on opening an RD with us.

Benefits of investing in RD
 

Whether you aim to build a robust financial foundation or need a flexible, low-risk avenue for your savings, recurring deposit accounts offer solutions to meet your requirements. Here are some of its key benefits:

Promotes regular savings: Committing to RDs helps you allocate part of your income for future goals regularly. With a fixed amount deposited on a consistent basis, you build a financial cushion over time. Discipline in saving becomes second nature, and you gradually accumulate wealth.

Safe investment: Recurring deposit accounts are not market-linked instruments. Thus, they are not affected by market volatility. You will receive the interest rate that was established when you opened the account. This risk-free nature makes RDs an appealing option for conservative investors who prefer guaranteed returns over high-risk ventures.

Flexibility in tenure for different goals: A recurring deposit account offers multiple tenure choices, giving you the freedom to pick a duration that aligns with your financial aspirations. So, whether you aim for a short-term objective like a vacation or medium-term goals like buying a car, RDs can be an effective tool for building your savings.

Automatic deductions: One of the key features of recurring deposits is their automatic savings feature. Your bank deducts a pre-decided amount from your linked savings account every month without requiring any action on your part. This feature helps you build a significant savings corpus over time without the need to remember to make monthly deposits manually.