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

The full form of RD is Recurring Deposit. Recurring Deposit accounts have been around for a while, and their popularity has not diminished. Many people of varied age groups consider it safe to place their trust and savings 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, timely deposits. It is a service provided by many banks where people can make regular deposits and earn decent returns on their investments. Understanding what a recurring deposit account is and how it works can help you understand whether it is the right savings option for you.

Recurring Deposit allows users to make small monthly contributions, gradually building a substantial sum by the time of maturity. While you consistently deposit into the accounts, the accumulated amount is also accruing interest. The Recurring Deposit interest rates are usually calculated on a quarterly compounding basis. 

Banks like IDFC FIRST Bank offer RDs with features designed for today's savers with flexible tenures and digital account management for ease of access and tracking.

How does a Recurring Deposit account work?
 

Recurring deposits, in terms of their risk levels, are often compared to fixed deposits. Both offer low risk savings but function in a different manner. An ordinary fixed deposit account requires you to make a lump sum deposit that will continue to accrue interest over time. A recurring deposit requires you to make the contributions every month. Instead of investing a lump sum, as with fixed deposits, you are required to deposit a pre-determined amount into your account each month. Recurring deposit contributions often start small, so you don’t have to create future savings at the cost of present-day necessities. When your RD has matured, you can withdraw the total amount, which is your total contributions plus the interest accrued on it.

An RD account means low risk savings with returns you can count on. It is a banking or postal service account in which a depositor puts a certain amount of money each month for a set length of time (commonly spanning six months to three years). This structure is for people who want to put down a set amount each month with the goal of receiving a payout after a few years.

With IDFC FIRST Bank, monthly deposits can be as low as ₹100, making it accessible for beginners while also allowing high-cap limit options up to ₹1,25,000 per month for seasoned savers.

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 few as 6 months or in multiples of 3 months, with the longest term being 3years. The interest rates offered by a Recurring Deposit are similar to those offered by fixed deposits. Senior citizens receive an extra 0.5% interest rate for their RD accounts. IDFC FIRST Bank provides interest rates up to 6.25% to regular RD account holders and 6.75% to senior citizens.

Some institutions such as IDFC FIRST Bank give you the option of opening an RD online. In a few simple steps, you can open an 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 through various banking channels. Here is how to open an RD online with IDFC FIRST Bank:

• Log in to the IDFC FIRST Bank Mobile Banking App.
• Locate the option to open a recurring deposit account. 
• Select the IDFC FIRST Bank Savings Account from where the investment amount has to be auto-debited.
• Enter the monthly deposit amount.
• Select ‘Best Plan’ to get the most suitable plan or select ‘All Plans’ to select a plan of your choice.
• Click on ‘Create RD’ to finish the process and start your Recurring Deposit!

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, enter 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, every step of the way. Now leverage the exclusive features of recurring deposit accounts 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 before it is due. 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.

What is a Recurring Deposit minimum amount?

The minimum amount for which you can book an RD with IDFC FIRST Bank is ₹100 and the maximum amount is ₹1,25,000 per month.

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.

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 build a corpus.

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 and make monthly deposits manually.

With IDFC FIRST Bank, this process is seamless with automated deductions and easy setup through the Mobile Banking App.

Why should you open an RD account with IDFC FIRST Bank?
 

The following reasons ensure that IDFC FIRST Bank becomes your first choice for opening an RD account.

1. Consistent savings through monthly deposits

2. Higher interest rates up to 6.25%

3. No penalty on missing an instalment

4. Flexible investment amounts as low as ₹100.

Conclusion
 

A Recurring Deposit account is one of the most disciplined and secure ways to build your savings steadily over time. Whether you're planning for a future expense, creating an emergency buffer, or simply cultivating a habit of saving, an RD aligns with diverse financial goals through fixed monthly investments and assured returns.

With IDFC FIRST Bank, this journey becomes even more rewarding. You benefit from higher interest rates up to 6.25%, no penalties on missed instalments, and the flexibility to start with just ₹100 per month. Add to that the convenience of online account opening through Mobile Banking, and your savings strategy becomes not just smart but seamless.

Ready to get started? Open a Recurring Deposit account with IDFC FIRST Bank today and take one disciplined step closer to your financial goals.