Open a DBS Bank Account Now
Life can throw a curveball at any time, so it’s always wise to prepare yourself for rainy days - rising living costs, funding your child's education, or planning for retirement. Having a nest egg set aside can provide much-needed financial security when things get rough. But with busy schedules and ever-increasing expenses, saving money consistently can be challenging.
This is where Recurring Deposit Accounts can help you. They offer a simple and convenient way to set aside money regularly, helping you reach your financial goals. In this blog post, we'll explore the features and benefits of Recurring Deposit Accounts, and how they can help you save for the future.
So, keep reading to learn more.
As the name suggests, a Recurring Deposit is a type of term deposit that allows individuals to invest a set amount of money at regular intervals over a predetermined period, typically 6 months to 10 years.
Unlike a Fixed Deposit where you invest a lump sum amount upfront, in a Recurring Deposit, you build your savings gradually. This makes it a convenient option for individuals seeking to save regularly and earn interest on their deposits. It's a suitable option for short-term goals, like saving for a down payment on a house or funding a vacation, as well as long-term aspirations such as financing your child’s education or planning for retirement.
Additionally, Recurring Deposits are typically offered by central banks in India, providing a safe and accessible option for individuals to grow their savings.
RDs
Interest Rate
Between 5% to 8%
RD Minimum Monthly Amount
₹100
Tenure
6 months to 10 years
Compounding Frequency
Quarterly
Premature Withdrawal
Allowed but with a penalty
Partial Withdrawal
Not allowed
Suitability
Individuals with short or long-term financial goals want to stay committed to saving while enjoying the benefit of an interest rate.
Download DBS Bank DBS app to get started.
Let’s take an example to help you understand how a Recurring Deposit works:
Imagine you open an RD Account with a bank. You decide to deposit ₹100 every month for 1 year.
So, if we calculate the interest earned over the year with the 6% interest rate compounded quarterly, it would be approximately ₹36. The maturity amount you would receive would be your total deposits (₹1200) plus the interest earned (₹36), totalling ₹1236.
An RD Account has several key features that make it an attractive investment option. Before we proceed to learn the benefits of Recurring Deposit Accounts , let’s take a look at their features:
Now that you know the features, let’s understand the benefits of Recurring Deposits.
Recurring Deposits allow investors to earn attractive returns even on small amounts of money deposited regularly. This makes RDs suitable for those looking to grow savings steadily over time.
Unlike other monthly investment schemes such as Systematic Investment Plans (SIPs) offered by mutual funds, Recurring Deposits offer guaranteed returns. This assurance can be comforting for investors prioritising stability and predictability in their investment choices.
Recurring Deposits help customers develop the habit of saving money at regular intervals and encourage them to invest for a more secure future.
One significant advantage of Recurring Deposits is the loan facility offered by most banks against the RD Account. Using this facility, customers can avail as much as 95% of the deposit amount as a loan (rate may vary from bank to bank).
Recurring Deposits are considered highly liquid because money can be withdrawn at any time, providing flexibility in case of urgent financial needs. However, it's essential to be aware that premature withdrawals may incur penalties or lower interest rates, so investors should carefully consider their options before withdrawing funds.
Making regular investments in Recurring Deposits is effortless, as these accounts can be funded periodically through standing instructions. The customer can just tell the bank to credit the RD Account every month from the linked Current or Savings Account.
Additionally, many banks enable senior citizens to earn higher rates, typically around 0.50% higher than the standard rates. Senior citizens can take advantage of this benefit by providing their identity and age-proof documents, making RDs an even more attractive investment option for retirees or older individuals looking to maximise their savings.
Besides knowing the the benefits of Recurring Deposit Accounts, you should also be familiar with the eligibility criteria for opening this type of deposit. Almost anyone can open a Recurring Deposit in India either on a single or joint mode of holding. The simple eligibility criteria (2) states that the following people can open an RD Account:
Opening an RD Account with DBS is very easy and requires minimum documentation.
Documents required to open an RD account for existing bank customers:
Documents required to open an RD account for new customers without an account:
Upload scanned copies or photos of required documents, which typically include:
Now that you know the benefits of Recurring Deposits, you can consider opening one to create a corpus. An RD can help you achieve your short and long-term financial goals, whether it's saving for something small like the latest phone or accumulating a lump sum for a down payment of a home loan. This investment gives you attractive and guaranteed returns and is a must-have for people looking for safe investment avenues.
Download DBS Bank app to open a recurring deposit and see your dreams take shape.
