# What is RD in bank account?

## What is RD in bank account?

A Recurring Deposit, commonly known as RD, is a unique term-deposit that is offered by Indian Banks. It is an investment tool which allows people to make regular deposits and earn decent returns on the investment.

## What is RD and FD in bank?

Both FD and RD are fixed income investments. They offer a guaranteed return on maturity. The interest rate is known upfront and it does not change during the tenure of the deposit. The interest rates offered on FDs and RDs are the same. FDs and RDs can be opened at the branch, through internet or mobile banking.

## Is RD or FD better?

The interest amount earned at the end of maturity of a Fixed Deposit is higher than the interest earned on an RD. The interest amount earned is lesser than the interest earned on an FD. The interest earned on an RD is paid on maturity along with the capital amount.

## How does RD work in bank?

A Recurring Deposit is a special kind of term-deposit offered by banks in India, which help people with salaried incomes to deposit a fixed amount each month and earn an interest which is equivalent to the interest on Fixed Deposits or FDs. The minimum period of an RD is 6 months, and the maximum is 10 years.

## What is RD account and its benefits?

Recurring deposits are as old as savings for the banking customer. Designed to save any amount over a period of time, RDs are an advanced version of the fixed deposit. This is because a recurring deposit understands that you may not be able to save all the money in one go.

## How is RD calculated?

The formula used is A = P(1+r/n) ^ nt, where ‘A’ represents final amount procured, ‘P’ represents principal, ‘r’ represents annual interest rate, ‘n’ represents the number of times that interest has been compounded, ‘t’ represents the tenure.

## Can I withdraw RD anytime?

Anytime withdrawal: Recurring deposit accounts also offer the facility of withdrawal of the account anytime. The bank might charge a small fee for it but it is still a good option for the depositor to have in case he or she needs the deposited money along with the return on it urgently.

## Is RD a good option?

Investing in an RD scheme is a great option for salaried people as they do not have to invest a lump sum amount at one time as is the case in Fixed Deposits. People with low income can also start investing in the RD scheme as the minimum amount to be invested is as low as Rs. 1000 per month.

## Is RD maturity amount is taxable?

The interest income earned on your RD is not exempted from income tax. It is taxable. You need to add the interest income as ‘income from other sources’ when you file your IT returns. TDS will be deducted on interest on recurring deposits if the amount exceeds Rs.

## How does post office RD work?

A post office RD requires a total of 60 deposits during the tenure, i.e. one deposit every month for 5 years. The first deposit is made when the user opens the account following the subsequent monthly deposits to be made on or before a particular date, depending on the date the account was opened.

## What is the benefit of RD?

Designed to save any amount over a period of time, RDs are an advanced version of the fixed deposit. This is because a recurring deposit understands that you may not be able to save all the money in one go. So, it allows you to save bit by bit, and get interest for the outstanding balance.

## What is interest in simple terms?

Interest is the cost of borrowing money, where the borrower pays a fee to the lender for the loan. Generally, simple interest paid or received over a certain period is a fixed percentage of the principal amount that was borrowed or lent.