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Features Of A Recurring Deposit

By Author: Aishwarya Mahurkar
Total Articles: 291

Recurring deposits are a type of fixed deposit which is offered by financial institutions to help investors improve their savings. Such a deposit requires the investor to deposit a fixed account of money each month for a predetermined tenure. The minimum tenure offered is 6 months and the maximum tenure offered by the financial institution is ten years. The reason why this type of a deposit is so popular is the fact that it is compulsory to deposit the fixed amount each month to ensure you get the benefit of the high interest rate offered. Many individuals decide to try and reduce their expenses and save up on a monthly basis but fail. This deposit ensures that the individual is able to meet the expected mark of savings he wishes. There are a number of features of a recurring deposit which an investor must be aware of before deciding to opt for it:

• One unique feature of a recurring deposit is the fact that is can avail a loan from the financial institution against it. There are a number of financial institutions which offer loans to investors on the recurring deposit they have opened. The deposit is used as collateral and about 80 to 90 percent of the value of the deposit is offered. Such a loan is extremely easy to get as the application process is far simpler.

• Originally no TDS would be charged on interest earned by recurring deposits opened. Since june 2015 however, all financial institutions charge TDS on the interest earned in a financial year if it exceeds ten thousands rupees. The TDS charged on the interest earned is ten percent.

• Since the interest rate offered on fixed deposits is higher than that offered in other investments with a low risk this is an ideal option to build your savings.

• One of the best facts of using s recurring deposit is the fact that one can deposit as little as ten rupees per month for a recurring deposit.

• Investors are not required each month to specifically visit the financial institution to deposit money for their recurring deposits. Most financial institutions provide their investor with the option where in each month the institution directly transfers the fixed amount from their current or savings account.

• The interest offered on a recurring deposit is compound interest. Every quarter, the interest is calculated by the financial institution.

Recurring deposits is a beneficial investment option which can be used by all individuals. The amount to deposit each month is decided by the individual and hence is easy even for individuals with low income to build their savings.

Author Bio :

An experienced writer on finance topics, the author articulates of investment choices such as fixed deposit products in India & recurring deposit schemes. She writes about a variety of topics including the benefits of recurring deposits & fixed deposits and how to make the right investment choice.

Total Views: 61Word Count: 480See All articles From Author

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