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Depending on the bank, you can open an RD account through a branch, mobile banking app, or internet banking with as low as ₹100.

Steps involved to open and manage an RD:

   1. Choose the Amount: You decide how much you want to deposit every month (Minimum deposit amount of ₹100 and in multiples of ₹ 100 therof)

   2. Select the Tenure: Choose how long you want to save (Tenure of 6 months to 10 years)

   3. Set up Auto Debit: Select the date. Your monthly deposit would get automatically deducted from your linked savings account.

   4. Open the RD Account: Start your RD with your bank

   5. Earn Interest: Your savings earn interest during the RD period

   6. Get the Maturity Amount: At the end of the tenure, receive your total deposits along with the accrued interest

Do you know Ujjivan offers higher rates on Recurring Deposits? What’s more? You get the flexibility to choose the tenure as per your financial goals. No need to visit bank branch. Download the EZY app and open RD from anywhere, anytime. Zero hassle, maximum benefits!

What are the Benefits of an RD?

A Recurring Deposit can be a convenient option if you want to save money regularly and work towards specific financial goals.

Some of the key benefits of RD include:

   1. Encourages Regular Savings: An RD helps you develop a consistent savings habit by allowing you to deposit a fixed amount every month

   2. Earn Higher Interest on Savings: Your deposits earn higher interest during the selected RD tenure, helping your savings grow over time

   3. Helps Achieve Financial Goals: You can use an RD to save for planned expenses such as education, travel, a special purchase, emergency funding or other future needs

   4. Easy to Manage: Since the monthly deposit amount is fixed, you know how much you need to save each month, making it easier to plan your budget

   5. Flexible Tenure Options: Banks may offer different RD tenure options, allowing you to choose a period that matches your savings goal

   6. Builds Financial Discipline: Making regular deposits can encourage you to save consistently instead of spending the money elsewhere

   7. Suitable for Gradual Savings: You do not need to invest a large amount at once, because an RD allows you to build your savings through smaller, regular deposits

What are Different Types of Recurring Deposit

Recurring deposits may come in different forms depending on the bank and its offerings.

RD vs FD: What is the Difference?

What Should You Consider Before Opening an RD?

It is important to understand the terms and choose an option that matches your savings goals and monthly budget.

Consider these points before opening an RD:

• Monthly Deposit Amount: Check the minimum and maximum amount you can deposit each month. Choose an amount that you can comfortably save throughout the RD tenure. With Ujjivan, you can start an RD with as low as ₹100.
• Interest Rate: Compare the rates applicable for different tenures. Use our RD Calculator to compare and check returns based on tenure.
• Missed or Delayed Deposits: Check the bank's rules for missed monthly payments. Some banks may charge a penalty for delayed or missed deposits.
• Tax Implications: Interest earned on RD is fully taxable and based on the tax slab you fall into. 

Can I Break or Close My RD Before Maturity?

Yes, you can close your RD before maturity. However, there are multiple factors to consider. First, if you close your RD before the tenure you had selected at the beginning, you will receive the interest rate applicable for that specific tenure. Moreover, if you close your RD before 6 months tenure, a 1% penalty fee would be levied. Please note that Ujjivan does not charge any RD premature closure fee for withdrawals made after 6 months from the time of deposit.

Is Interest Earned on RD Taxable?

Yes, the interest earned on RD is fully taxable. RD tax liabilities depend on the income tax slab you fall into. Also, if your interest income exceeds ₹50,000 (for regular depositors) or ₹1 lakh (for senior citizens) in a financial year, bank will deduct 10% TDS (Tax Deducted at Source). That said, if your total income is below the taxable limit, you can submit Form 121 to request the bank not to deduct TDS from your interest income in that particular financial year.

How to Calculate Interest on Recurring Deposit?

Interest on a Recurring Deposit is compounded quarterly. The formula used to calculate the RD interest rate is:

M = R[(1 + i)^n - 1] / (1 - (1 + i)^(-1/3))

Where:

• M = Maturity Value
• R = Monthly Instalment
• n = Number of Quarters
• i = Rate of Interest / 400

However, manual calculations can be complex and may leave room for errors. You can use Ujjivan’s RD Calculator to check your returns. 

Final Thoughts

A Recurring Deposit (RD) is a simple and convenient way to save money regularly while earning interest. By understanding the RD full form, RD meaning, and how RD works, you can decide whether an RD account suits your savings goals. With regular monthly deposits, an RD can help you build your savings steadily over time.

Disclaimer:

The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.

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