1. Start with a less amount

In recurring deposit, you invest a fixed amount every month. We can start with a sum of Rs 100 every month. It is very similar to paying the EMI. In many banks, the facility is available to start recurring deposit with a monthly investment of as low as Rs 100. Read Also: Best Banks To Open A Recurring Deposit

2. Fixed duration

You can go for a recurring deposit option for a fixed tenure. The tenures offered will be different in banks.In most of the banks, the minimum tenure will be 6 months and maximum period will be up to 10 years.

3. Interest rate is fixed

The rate of interest in a recurring deposit is fixed. It remains the same for the entire duration of the recurring deposit. The interest you earn on a recurring deposit depends on the amount of money contributed every month and also the period of the deposit. The bank rates are similar to the interest rates offered on term deposits.This interest rate varies from bank to bank and tenure of recurring deposit. Most of the banks offer it between 3.75% and 9.5%.

4. Premature Withdrawal

In the case of an emergency, the amount can be withdrawn prematurely. Most of the recurring deposits can be closed ahead of the maturity date. A penalty charge and a penalty on the interest rate may be levied by the banks.  Recurring deposit account has a lock-in period of one month. Premature closure in less than a month will not earn interest. Only the principal amount will be returned to the investor.

5. Loan

Recurring deposit holders have the option to take loans by using the deposit as a collateral. About 80% to 90% of the deposit value can be given as loan to the account holder. Best Recurring Deposits With High Interest Rates To Consider

6. No TDS

Recurring deposit does not deduct TDS on your interest. For fixed deposits TDS will be deducted. When you file your tax returns, if your annual income, including this interest is taxable then you will have to pay tax, otherwise you need not. No TDS on Post Office Recurring Deposits