The recurring deposit is one of the best options for investment in India. It is a term deposit where you have to pay monthly installments, and at the end of the term, you will get the maturity amount after TDS containing your deposited amount and interest on it.
The first step you must take to check out the interest rates of different banks and then choose the bank that you like. After choosing your bank, you can visit their nearest branch or check their website for the terms and conditions. You should be read all the penalties applicable under different unforeseen circumstances like frequent payment dues, non-payment for consecutive months and likewise. The following is the complete list of prerequisites for starting a recurring deposit.
Open A Savings Account
- Open a Savings account in the bank you have chosen. To open a savings account, you need to visit the nearest branch of the bank. Fill up the forms, produce identity and address proof and other necessary documents like PAN card, Aadhaar card, recent color photos, and deposit the minimum balance to start an account.
- Activate the Net banking facility for your account if you wish to start online recurring deposit hassle free. You can also opt to start a recurring deposit account offline by revisiting the nearest branch.
In either case, you have to choose the recurring scheme like regular recurring scheme, flexi recurring scheme, senior citizen recurring scheme or any other special type of recurring scheme the bank offers. Understand each of the schemes clearly along with their interest rates, hidden charges, and penalties before selecting one. The Flexi recurring scheme is suitable when your monthly installments are high. Otherwise, you can always select a regular RD with an auto deduction of monthly installment feature from your saving account so that monthly payments do not get overdue.
- Then you have to select the monthly installment and the tenure. A longer tenure means better interest rates and better returns. It also means you need to pay monthly installments for a long time. The minimum term is generally 6 months while the maximum is 10 years. The minimum monthly installment is generally Rs.100. You can use a recurring deposit calculator to see how much maturity amount you get based on monthly payment, tenure and interest rate so that you can decide the perfect combination for you.
- Fill up the forms carefully, read all the terms and conditions once again and produce any required documents most of which are already with the bank. If you open it online, your savings account will be automatically linked to the recurring deposit account, and you can opt for auto deduction feature. In offline mode, you must ask the representative to ensure that the above-mentioned things are done. You have to produce your savings account passbook and a few recent color photos.
Pay the first monthly installment and congratulations; you just started a recurring deposit. You can take a print of the payment and details … Read More