Long-term Recurring Deposits (RDs) offer several benefits for people looking to save and grow their money over an extended period. They offer a disciplined and predictable way to save and grow your money over an extended period. RD is particularly beneficial for individuals, for example, senior citizens, who want to achieve specific financial goals or prefer low-risk investments with guaranteed returns.
Long-term RDs are ideal for achieving various financial goals, such as funding a child’s education, planning for a wedding, or building an emergency fund. The disciplined approach of regular deposits helps individuals reach these goals systematically.
Disciplined Savings
RDs encourage regular and disciplined savings. By committing to a fixed amount each month for a predetermined period, individuals develop a habit of saving, which can be especially beneficial for achieving long-term financial goals.
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Interest Rates
Long-term RDs typically offer higher interest rates compared to short-term RDs or regular savings accounts. This means that your savings can grow at a faster rate, helping you accumulate a more substantial corpus over time.
Fixed Returns
Unlike other investment options that may be subject to market fluctuations, RDs offer predictable and guaranteed returns. You know exactly how much interest you will earn on your deposits, providing financial stability and certainty.
Safe Investment
RDs are considered safe investments because they are offered by banks and are backed by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to a limit of Rs 5 lakh per depositor per bank. This makes RDs a secure way to save money over the long term.
Loan Facility
Some banks provide the option to take a loan against the RD. This can be useful in emergencies when you need access to funds without breaking the RD prematurely.
No Market Risk
RDs are not subject to market risks like stocks or mutual funds. This makes them suitable for risk-averse individuals who want a stable and low-risk way to grow their savings.
It is also easy to open and manage long-term RD accounts. However, it’s essential to compare interest rates, tenure options, and terms and conditions offered by different banks to choose the RD that best suits your requirements. The table below compares the interest rates on RD for 5 years and compares how Rs 5000 monthly will grow over five years.
RD Interest Rates offered by Banks (For 5-Year Tenure)
Note: Interest rate on Recurring Deposits (RD) for all listed (BSE) Public and Pvt Banks considered for data compilation. Data as on respective banks’ website on 19 Sep 2023. Interest rate (on RD for non-senior citizens) is considered for a tenor of 5 years. Banks for which RD rates are not explicitly mentioned on their website are not considered. *Return is calculated with monthly compounding of interest.
Compiled by BankBazaar.com.
