Recurring Deposit: If you have opened an account before the 15th of the month, then the installment of every month has to be filled before the 15th.
Post Office Scheme: Post office schemes for small savings and investment are very much liked by the people. But do you know that you can start a recurring deposit investment in the post office even from just 100 rupees? By making a recurring deposit, you do not have to deposit a large amount like a fixed deposit in one go. You can also RD with small savings of every month and earn better interest than earning on a savings account. In the Post Office National Savings Recurring Deposit Account, you can also RD only Rs 100 per month.
What is National Savings Recurring Deposit?
This is the Recurring Deposit scheme of the post office, which has a duration of 5 years. You deposit money in it every month and you earn at a fixed rate of interest. The minimum investment amount for this is 100 rupees and there is no upper investment limit. Currently, this scheme is paying interest at the rate of 5.8 percent.
There is also an option to open a joint account, while children above the age of 10 years can also open this account. Parents can open these recording deposits for their children as well. If you have opened an account before the 15th of the month, then the installment of each month has to be filled before the 15th.
You can also make an advance deposit in the account. The duration of the scheme is 5 years but if you want, you can extend it by 5 more years.
How much will you earn?
The recurring deposit currently earns 5.8% per annum. Compounding is also beneficial on every quarter. That is, if you make RD of 500 every month and continue it for 5 years, then you will be able to deposit a total of 34,851 rupees. You invested Rs 30,000 in this and earned Rs 4,851 from interest.
Recurring Deposit: Loan can be taken on account
If you have deposited 12 installments in the account, then you can take a loan up to 50 percent of the investment amount. To take a loan, you have to fill the loan application form with the passbook and submit it to the post office. There will be an option to return this loan to EMI or lump sum. However, the interest rate on this will be 2 percent more than the interest on your RD. It will take only till the withdrawal of interest amount to pay it back. If you do not return the loan till maturity, then part of the loan will be taken out of the maturity amount.
Can I close my account before 5 years?
Recurring Deposit: There is an option to close a recurring deposit account after 3 years, but then you will get returns like the post office savings account. For this, you can apply in the post office. On the other hand, if you have made an advance payment, then the account will not be closed till then.
What will happen if the installment is not paid?
If you do not deposit any installment, then a penalty of 1 rupee is charged per 100 rupees invested. In the next month’s installment, you will have to pay the installment of both the months and the penalty for one month. If the installment is not paid for 4 months, then the account will be closed. However, it can be opened back within 2 months. If you did not pay the installment for 4 months and got the account revived, then you can extend the maturity period as much as the default of the month.
