In the last quarter of 2018, bank deposit growth stood at 9.3%, below credit growth, which came in at 12.9% y-o-y, according to India Ratings and Research. The agency believes that with credit growth being higher than deposit growth, banks are likely to increase their deposit rates. To make the most of this increase, it can be a good idea to learn all about your savings options. A popular way to save for the future is through recurring deposits, a form of fixed deposits.
Before you wonder how to open a recurring deposit account, here are some reasons that make recurring deposits attractive.
High Rate of Interest
One of the main advantages of opening a recurring deposit account is the high rate of interest offered by them. Some banks offer up to 7.25% interest on such deposits, much higher than savings accounts. However, keep in mind that you will receive the total payout only after the completion of the tenure.
A recurring deposit is one of the safest ways to invest your money since they are not impacted by market fluctuations to a significant extent. With a fixed interest rate, you can be sure to get the same interest rate even if the market takes a downward turn. Recurring deposits also allow you to save for short periods. The minimum duration for some benefits is as low as six months. Due to such reasons, they are especially goodfor tackling your short-term investment needs, such as children’s education fees, renovation, furnishing your house or a foreign vacation.
Ease of Investing
In the case of recurring deposits, all you need to do is deposit a particular amount each month. This monthly process can beespecially helpful for salaried individuals. This process also helps build a healthy discipline for savings. Along with this, in a recurring deposit, you don’t have to invest a large amount in starting the deposit. You can start with as low as ₹2,000 per month. You also have the option of making higher investments. You can go as high as ₹75,000 per month with recurring deposits.
No Penalty for Skipping Payment
In the early days, if an investor would have missed a payment due to some reason, he would have been forced to pay a fine. Today, there are many flexible recurring deposit schemes which do not charge any fine even if you do not make your payment for a particular month. You can also make pre-mature withdrawals in such flexible schemes. Keep in mind that, in general, no interest is paid if the amount is withdrawn before 30 days. If the withdrawal is made between 30 days and six months, the interest received is on the basis of the fixed deposit rate provided for 30 to 45 days.
If you are wondering how to open are curing deposit account, all you need is a savings account. With a savings account, you can open a linked account, without any need for further documentation. This feature makes it one of the easiest and most hassle-free ways of creating wealth. Many banks also allow you to open a recurring deposit account online.
Planning for a secure future starts with making smart investments. Check out your options for recurring deposits and invest today.