RD Full Form

As a bank account holder, you must have come across Recurring Deposits. In case you want to learn more about them, this article is for you.

What is the Full Form of RD?

The full form of RD in banks is Recurring Deposit. They are a convenient investment tool with attractive interest rates.

In general, ‘recurring meaning’ is anything that happens repeatedly. Recurring deposit meaning in banking is a deposit whose installments are paid over a selected tenure every month. 

If you were searching for ‘RD ka full form’, it is a recurring deposit and we will now look at how it works.

How Does an RD Account Work?

Now that you know RD full form, let us look at how recurring deposits work in banks -

• Once you open an RD account, you select your preferred tenure

• RD tenures generally range between 6 months to 10 years

• You then continue paying the decided installment throughout your selected tenure

• The interest is calculated every quarter generally

• When your tenure is over, your maturity amount, consisting of your principal and interest amount is deposited into your account as a lump sum

Recurring Deposit Meaning - Features

The features of recurring deposits make them a perfect investment tool. They are mentioned below -

• You can invest money in equal monthly installments conveniently

• No lump sum amount needs to be made while starting an RD account

• Installment amounts start from as low as Rs.10 and go up to Rs.1,99,99,900 per month

• Tenures can be selected starting from 6 months to 10 years

• Interest rates depend on the tenure, choice of bank, your age, etc.

• Interest ranges from 2.65% to 8.35%

• Senior citizens get higher interest rates in most banks

• Loan facilities are available that go up to 90% of the amount saved in your RD account

• Premature withdrawals are also allowed but a small penalty might be charged by your bank

Benefits of Recurring Deposits

Even though RDs are not tax-saving investments, they have major benefits for both beginners and pro-savers. Here are some of the benefits -

• Safety - The money you invest in recurring deposits is not dappled in the market. This means that your money is safe and the interest rates do not fluctuate. You get the interest as promised at the start of the investment.

• Accessibility - Opening an RD account is extremely simple and can be done online as well. If you already are a customer of the bank, you don’t even need to submit any documents. You can check the money saved, the maturity date, and all other details on your bank website or application.

• Earning While Saving - You earn while you save, your money earns interest every quarter. You can keep saving with small monthly installments without affecting your budget.

• Loan Facilities - Banks often give pre-approved loan offers that go up to 90% of the amount saved in your recurring deposit. 

• Lump Sum Payment - The best feature is that you get the maturity amount at the end of your tenure as a whole. It consists of your interest and principal amount. It gets directly credited to your bank account or the account of your choice.

• Special Facilities - Banks run various RD schemes which give special features like premature withdrawals without penalties, or the chance to deposit more money than your installment amount.

Conclusion

Recurring deposits are one of the most popular investment tools. They are easily accessible and you can invest as low as Rs.10 to Rs.100 every month. You can continue investing from 6 months to 10 years.

Now that you know RD account full form and how it works, do you think it is a good investment tool for you?