Recurring Deposit (RD) is a common investment choice after fixed deposits, govt schemes and other risk-free investment tools. Customers can choose from a variety of investment amounts and terms with RD, as well as a variety of other advantages. You can open a Recurring Deposit account with a variety of financial institutions, including banks, NBFCs, and even the post office. With this low-risk investment vehicle, you can start contributing monthly across your selected tenure (varies from 6 months to 10 years) to welcome guaranteed returns in your portfolio. RD enables you to receive guaranteed interest on your deposit at regular intervals before it matures or a fixed period expires. Only after the maturity period has expired, the investor receives the capital invested as well as the interest earned. Talking about the battle between flexi RD and regular RD let's understand both in brief and opt for one that suits you the most.
Flexi Recurring Deposit (RD)
By opening a flexi RD account you can deposit any amount per your convenience to earn attractive returns at maturity. Flexi Deposit, unlike Recurring Deposit, allows you to choose the deposit amount between the minimum and maximum caps per financial year. A Flexi RD's minimum and maximum deposit limits are set by the respective banks. Flexi RD depositors can adjust the monthly instalment amount depending on their convenience and this additional deposit is not subject to a late payment penalty. The bank may, however, levy a penalty if the minimum deposit is not paid on time per financial year. Interest will be compounded at quarterly intervals on term deposits, depending on the amount outstanding on the last day of each month. Furthermore, you must bear in mind that TDS will be applied to the interest you pay. Flexi RD interest rates differ from bank to bank, with higher rates for senior citizens. Banks often provide a variety of deposit tenures on these deposits, and they set the interest rate based on the preferred tenure. If we consider the above factors then SBI Flexi Deposit allows you to choose the deposit amount from a range of minimum and maximum amounts per fiscal year. The minimum deposit balance per fiscal year is Rs. 5,000/-. Higher amounts in multiples of Rs. 500/- can be deposited at any time, with a minimum of Rs. 500/-. Deposits can be made at any time during a month and in any amount. In a financial year, the gross deposit amount limit is Rs.50,000/-. The deposit term is 5 years minimum and 7 years high. Failure to pay the minimum deposit will result in a penalty of Rs. 50/- per fiscal year. Only the debit account from which the SBI Flexi Deposit was initially funded will receive the maturity proceeds or the amount payable before maturity. In the event of an early withdrawal, the rate will be 0.50 percent lower than the rate that was in effect at the time of the deposit with the Bank. You will be given the option to maintain the nominee(s) for SBI Flexi Deposit account.
Regular Recurring Deposit (RD)
Customers can invest an amount of their preference per month and gain returns with convenience thanks to recurring deposits (RD). Most Indian banks and NBFCs provide recurring deposit accounts with terms ranging from six months to ten years. RD pays you a fixed rate of interest for your investment at a certain frequency for a set period of time or on maturity. The amount payable upon maturity, as well as any remaining or accumulated interest, is paid at the end of the term. The interest rate is the same as that paid on a Fixed Deposit, making it better than a savings account. RD also has the option of taking a loan against a deposit, i.e., using the deposit as collateral. The account holder can borrow between 80 and 90 percent of the deposit amount. Recurring investments, unlike stocks and mutual funds, have fixed returns on the principal amount deposited. A recurring deposit account allows a person to deposit a certain amount per month for a certain period of time, earning interest in the same way as fixed deposit accounts do. Senior citizens can also benefit from RDs. Senior citizen deposits have higher interest rates than normal deposits. The bank determines the minimum amount and term for this. As opposed to regular recurring deposits, most banks give senior citizens an additional interest rate of 0.25 percent to 0.75 percent respectively.
The flexibility of a recurring deposit account is one of its benefits. A flexible recurring deposit is a type of account that allows you to invest any amount of money at any time. They enable a depositor to choose both the initial investment amount and adjustable instalments in multiples of the core instalment amount. For eg, if the depositor selects Rs. 1000 as the initial amount, he can make subsequent deposits of Rs. 1000 or multiples of Rs. 1000. A regular recurring deposit is a deposit that requires you to make fixed monthly contributions for a set period of time. Customers of Flexi RD, on the other side, can select the amount of monthly instalments that best suits their needs. Every month, the initial amount deposited when the Flexi RD was opened must be paid on the specified date. Flexi deposit, on the other hand, allows you to make additional deposits up to a certain amount above the initial or minimum amount, which is not possible with regular RDs.