RD: Banks can open RDs for a period ranging from 6 months to 120 months, no post can open RDs for a period of less than 5 years at the post office
Regular small savings every month helps in making large amount without burdening the pocket. Recurring deposits (RD) offer guaranteed returns after a certain period of time. Both banks and post offices can open RD simultaneously.
You can contribute 100 rupees every month to open RD in bank or post office. To start RD, you have to open a savings account with a bank or post office.
Bank RD
You can open RD in banks for a period of 6 months to 120 months. Banks typically offer interest rates between 5% and 6% on RD for 12 months.
On 5-year RD, banks pay 6% to 6.6% interest to all people except senior citizens. People above 60 generally get higher interest, which is 20-25 basis points (bps) more than the normal rate. Flexible RD schemes are also available in various banks.
Submit this form, TDS will not be deducted
TDS can be deducted if the interest income from RD exceeds Rs 40,000 per financial year. For senior citizens, this limit is Rs 50,000 per financial year. At the same time, if your total annual income comes under exemption, then you can submit Form 15G / 15H to the bank, so that TDS is not deducted.
Post Office RD
You can also open RD at the post office by depositing a minimum of 100 rupees per month. Further, investors can deposit any amount in the coefficient of 10. However, RD’s tenure is fixed in the post offices.
No RD can be opened for a period of less than 5 years. The interest rate is 5.8%. Anyone above 10 years of age can open RD. Interest earned on RD is paid on principal along with principal.
However, one has to go to the post office to open RD, but in case of banks, one can do it easily with the help of phone or internet banking.
Bank is better for quick returns
Investment planners feel that RD is a basic investment tool and anyone can start it with their own pocket money. It helps in developing the habit of saving.
Investment planner Nilotpal Banerjee from Kolkata said, “The main disadvantage of RD is that it is not good in terms of tax. Because the interest received from RD is considered income and has to be declared. Along with this, TDS is also deducted on this. However, it is a good option for people who invest a fixed and small amount every month. ”
