A Recurring Deposit (RD) is a special kind of term deposit offered by banks which helps people with regular incomes to deposit a fixed amount every month into their RD account and earn interest at the rate applicable to Fixed Deposits.
How it Works
Unlike a Fixed Deposit where you deposit a lump sum once, in an RD you deposit a fixed sum of money every month for a pre-defined period (e.g., 1 year, 2 years, etc.). The interest is compounded quarterly in most banks.
Benefits
- Disciplined savings habit.
- Higher interest rates compared to savings accounts.
- Safe and secure investment.