As Indians typically set aside some portion of their earnings for their future needs, Recurring Deposits(RD)have become a popular option from olden days. Particularly housewives save some money monthly by putting their savings in Gullak/Piggy Bank.
Though putting savings in a Piggy Bank is appreciable, it won’t fetch any “Interest” to your savings. For those who want to save some money monthly and want some additional interest to their savings, RD is a preferable choice.
As the world of savings has been transforming, RD Plus exists; a slightly different savings product. With RD Plus, The customer can step-up his savings to 10 times of his pre-fixed monthly installment.
Let us discuss the difference between RD and RD Plus in detail-
|Recurring Deposit(RD)||RD Plus|
|1.Prefixed amount has to be deposited every month||1.The customer can step-up 10 times of his prefixed monthly installment|
|2.Penalty would be levied if the depositor misses the due date||2.No Penalty would be levied, the customer is free to deposit 10 times of his prefixed monthly installment|
|3.Interest calculation is fixed||3.Interest calculation varies on the amount of the deposit deposited per month|
|4.Maturity value is fixed||4.Maturity value depends on the number of installments and the amount deposited|
|5.The depositor can renew the term any number of times, but the deposit amount can’t be altered||5.The depositor should take prior permission to renew the term subject to the terms and conditions of the bank|
|6.Premature cancellation is possible with slight penalty||6.Premature cancellation is allowed but the interest is calculated with discount(Lower than the fixed interest rate)|
Almost all banks are accepting RD and RD Plus Deposits, where you can select one of them and avail the service.
But be remember, RD Plus gives slightly higher return when compared to RD. Choose either RD or RD Plus based on your income levels and required corpus amount to achieve your short-term goals.