Recurring Deposits Explained

What are recurring deposits?
They are similar to fixed deposits and Systematic Investment plans.
An individual will make a fixed investment (monthly) to get a certain rate of Interest.
On maturity, you get the total accumulated corpus with interest earned.

Where can I open it?
Any Bank or in Post office as well.

Whats the advantage?
- Lock higher interest rates for long term
In case some banks are providing high interest rates for a year or 555 days or even 10 years, one can lock these interest rates by opening an RD.

- Small investment monthly installments
If you do not have a lump sum to open a fixed deposit, you can put small monthly installments (e.g. min of 100/500 Rs - varies with banks) and lock the interest

What if you default and not make a payment?
All banks have their own rules and one should check before making the RD.
In some banks there is a grace period of some months while in other there is a penalty.

Tax Savings?
There is no tax savings in RD.
One needs to pay tax on the interest earned.
For minors, the interest needs to be added to the guardians income.