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Nevertheless, those days are gone when savings accounts were the only option to deposit money into. Pixabay

The financial world is all about investing less and making more profit from deposit. The pillars on which the financial condition of a person or organization stands erect are

  1. Savings
  2. Investment
  3. Returns

These three elements can come in complete coherence only by choosing recurring deposits. Recurring deposit is a monthly saving scheme which allows the investors to deposit a fixed amount of money in regular fixed intervals of time at a rate of interest provided by the institution in which the account is opened.


A person belonging to the service or business class earns savings at the end of the month. In general, it is deposited in a savings account into banks. Nevertheless, those days are gone when savings accounts were the only option to deposit money into. In the financial race, there are several new services providing better services in the form of a higher rate of interest than savings accounts.

If you are looking forward to investing in the recurring deposit but are not sure about the financial calculations, you can use the rd calculator by Scripbox. Having understood what a recurring deposit is, let us now proceed to learn its features in brief.


Recurring deposit is the ideal scheme to invest less and get maximum benefit over a period of time.

Features of recurring deposits

  1. Develops a habit of investing RD tends to develop a habit of investing amongst the common public by offering investment range between INR 100 to INR 1000 or more per month.
  2. Tenure of investment The investor can invest in recurring deposits for a minimum of six months to a maximum of 10 years.
  3. A high rate of interest- Investing in recurring deposits guarantees the investors a higher rate of interest which is often equivalent to that of fixed deposits. The rate of interest is higher than the rate of interest that investors get in a savings account.
  4. Additional loan service RD provides the facility to investors of taking a loan against the deposit by keeping it as a collateral.
  5. Premature withdrawal not allowed Though recurring deposits does not promote premature or early withdrawal, in case of premature withdrawal, the investor gets the money back after deduction of merely 1% penalty.

Benefits of Recurring deposits

Small Investment, Good Returns

Investment in recurring deposits guarantees more significant returns over small investments. It is the aid of all financial problems to people belonging to service or even business class. The investor can invest the savings monthly, and at the end of the maturity period, he gets back the money invested accumulated depending upon the rate of interest provided by the bank. The investor can decide the frequency and rate of investment using rd calculator.

Additional rate of interest for senior citizens

Recurring deposits provides some additional benefits to the senior citizens of India. Any citizen who is more than 60 years of age can avail these benefits. The perks include an additional rate of interest on investment. Senior citizens get an incentive of 0.50 % on their investment, which will return to them in the form of a higher maturity amount at the end of the investment tenure. Apart from these exclusive RD services, the bank also provides many more benefits to older people. The additional returns on maturity amount can be calculated easily with the help of a rd calculator

Taxation benefits

Recurring deposits also provide tax benefits to its investors. If the investor is getting a rate of interest that amounts to equal or more than INR 10,000, the bank cuts TDS of 10 % if the PAN is submitted and 20% in case PAN is not submitted. Senior citizens get one more benefit over here as well. The limit of the interest earned for them is INR 50,000 above which they will be charged TDS. In the case of unsureness, the investor can use rd calculator to calculate the value of TDS.

Premature withdrawal benefits

Though the bank does not allow premature or early withdrawal of money, in case of an emergency, the investor can withdraw the deposited amount by paying only 1% as penalty. The rd calculator gives an insight into the total remaining amount after deduction of the penalty.

Loan benefits

People who are investing their savings in the form of recurring deposits can avail the loan facility against their invested amount. The investor can ask his/her bank to incent a loan over the recurring deposit account by keeping the deposit as collateral. The investor can get a loan of a maximum of 80% to 90% of the value of the deposit. He can use a rd calculator to calculate the amount of loan value he can get on his RD account. In case, you have nothing in order to avail other types of loans, a recurring deposit can help you to get a secured loan and deal with the financial emergency.

Factors to keep in mind while investing in Recurring Deposits

Rate of Interest of bank

The rate of interest provided on recurring deposits vary from bank to bank. The average rate of interest provided by banks on RD is up to 7.24%. If you are planning to invest your savings in RD, you should be aware of the different interest rates of different banks. Here is a table to help you out in deciding the bank you should choose to start your recurring deposits service.

Name of the bankRate of interest for common peopleRate of interest for senior citizens
Allahabad Bank6.25%-6.45%6.25%-6.45%
Bank of Baroda5.50%-6.25%6.00%-6.75%
HDFC5.65%-7.00%6.15%-7.50%
Indian Bank3.50%- 3.75%4.00%- 4.25%
Canara Bank5.50%-6.25%6.00%-6.90%
Bandhan Bank 6.80%-7.50%7.55%-8.40%

Tenure of the RD account

The investor should be very particular about the tenure for which he/she wants to invest in recurring deposits. This is because the maturity amount is directly proportional to the tenure of investment. You can use a rd calculator to calculate the returns for different investment periods.

Recurring deposits service is the best financial platform to invest in as it gives high returns with nil risks. However, the returns on it are not very commendable. When a risk-free investment is your choice then RD is a great option but when it comes to getting higher returns, you should go for other alternatives. The best alternative would be investing in mutual funds. Let us understand why!


A person belonging to the service or business class earns savings at the end of the month. In general, it is deposited in a savings account into banks. Pixabay

Mutual Funds Investment: A Great Alternative to RDs

As known to us, mutual funds are open-end funds managed by experts. It pools money from numerous investors and invests sums in different bonds that offer high returns. The reason why mutual funds can serve to be the best alternative are as follows:

  • The money invested by you will be managed by professional fund managers, who in turn, invest the same on the basis of thorough market research. This eliminates the necessity of putting a keen look continuously at the market ups and downs.
  • The investment is generally made in less volatile securities, thus ensuring regular returns over a longer period of time. Also, when compared to recurring deposits, the average return from mutual funds is around 8-10% over the last few years, whereas the maximum interest that can be earned from RDs is 7.8%.
  • One can invest as low as Rs 100 in mutual funds and can increase the same afterwards. It is entirely flexible. The best part is that there is no time constraint or anything like a maturity period. On the other hand, you need to invest a fixed amount of sum every month (or as chosen) in your RD account. In addition to this, you will also not get all the interest if the invested sum is withdrawn prior to maturity.

ALSO READ: Risk of Liver Cancer is High Among Older Adults: Study

Overall, it can be said that mutual funds can prove to be the best investment option when the investor wants to gain higher returns and needs utmost flexibility in investment. Moreover, one can also diversify his investment portfolio by putting money with different fund managers. Mutual funds are designed in a way to mitigate risks as much as possible. However, keep one thing in mind that this type of investment demands patience if you want your money to grow for a longer period.


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