Recurring deposit (RD) is one of the best deposit options for investors who plan to accumulate funds for various purposes, but find it difficult to save enough for it. With RD, one can start saving small on a monthly basis. A recurring deposit account can be opened with either a bank or a Post Office. However, the interest rate offered by the post office is comparatively higher than the interest rates offered by banks. Currently, SBI offers an interest rate of 6.10 per cent on its RD scheme, whereas India Post offers an interest rate of 7.2 per cent on its Post Office Recurring Deposit Account.
The interest rate applicable on Post Office deposits is reviewed by the Ministry of Finance on a quarterly basis. For the fourth quarter of the current financial year, the quarter ending March 31, the finance ministry last month retained the interest rates at existing levels.
If you are planning to invest in the Post Office RD account, here are some of the key things to know:
Account Opening
For opening an account under the Post Office Recurring Deposit scheme, the minimum investment needed is a minimum of Rs 100 per month, which can be any higher amount in the multiple of Rs 10.
Rate Of Return
Investment in the Post Office Recurring Deposit Account for the 4th quarter of the current financial year fetches an interest rate of 7.2 per cent, wherein if an amount of Rs 10 is invested in the five-year Post Office recurring deposit account, it will fetch the account holder Rs 725.05 on maturity.
Tenure
Post Office RD comes with a tenure of 5 years, and the date of maturity is 5 years from the date of opening the account. The RD account can be extended for an additional 5 years by giving application at the account office.
Maximum Investment
The Post Office RD account doesn’t come with an upper limit to the investment allowed in it. Hence, you can invest up to any amount in this scheme.
Mode Of Payment
The Post Office RD account can be opened against payment in cash or cheque. Note that, according to the India Post website, deposits can be made up to the 15th day of a next month if the account is opened before the 15th day of the calendar month. Also, deposits can be made up to the last working day of the next month if it is opened after the 16th of a month. One can also make an online deposit through Intra Operable Netbanking or Mobile Banking.
Withdrawal
You can also make a withdrawal from the scheme, up to 50 per cent of the balance, after one year. This can be repaid in one lump sum along with the interest at the prescribed rate, at any time during the duration of the account.
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Source: Financial Express
