Confused – which is the best FD or RD?

POSTED BY pateldilip00 ON March 21, 2014 1:16 pm COMMENTS (8)

Dear Sir,

I want to invest but i confused which is the best FD or RD?

Please help me

8 replies on this article “Confused – which is the best FD or RD?”

  1. Viren Phansalkar says:

    Hello,

    As correctly pointed out by Ashish, FD is for lumpsum investment and RD is for SIP kind.
    However, note that some people wait for lumpsum money to get into their bank and then create a FD for it. Instead of this, better way is, go for RD. Reason is, for the time period till you create a lumsum amount, you get only 4% interest in SB account. Hence, in such situations RD is better. If you suddenly get a lumpsum amount by some bonus or gift, go for FD else RD.

    1. pateldilip00 says:

      Dear Viren Phansalkar first of all thank you very much for reply for understanding of FD and RD.

      Now help me in below situation if possible from your side.

      I have taken loan from Indiabulls housing finance from August 2012 at that time ROI is 10.5% but now the same is 11.0% and when i ask my friends about change of ROI in their loan they said no.And i also search for them but most of the bank not increase their ROI.

      So now i want to transfer my loan to BOB or HDFC home loan both interest are same i.e. 10.25%.

      From Interest Rate(%)
      2-Dec-13 11
      28-Aug-13 10.9
      14-Mar-13 10.4

      Loan Type Rate Based
      Sanctioned Loan Amount (in `) 14,71,757
      Disbursed Amount (in `) 14,71,757
      Installment (in `) 14,643.00
      Current Interest Rate (%) 11
      Loan Term (Total) in Months 274
      Loan Term (Balance) in Months 254

      After that indiabulls give me offer to reduce interest rate from 11.0% to 10.25%.

      Charge is -5618
      Outstanding amount-1437943
      Premium-14643
      Current interest rate-11%
      Tenure in month-253
      Tenure in year-21.1

      They give me offer
      Current interest rate-10.25%
      Tenure in month-215
      Tenure in year-17.92

      I save
      Tenure in month-38
      Tenure in year-3.17

      So please guide me what i do?

      Waiting for your favorable response.

      Thanks in advance.

  2. Ashish Garg says:

    Dear Dilip,

    FD is one time investment of a lumpsum amount for a fixed tenure whereas RD is a fixed sum invested every month for a certain tenure, say 6 months, 9 months, 1 year and so on. Both products are different in nature and should not be compared with each other.

    If you have a lumpsum amount to invest, go for FD or if you wish to invest every month with a fixed amount go for RD.

    Ashish

    1. pateldilip00 says:

      Dear Ashish Garg first of all thank you very much for reply for understanding of FD and RD.

      Now help me in below situation if possible from your side.

      I have taken loan from Indiabulls housing finance from August 2012 at that time ROI is 10.5% but now the same is 11.0% and when i ask my friends about change of ROI in their loan they said no.And i also search for them but most of the bank not increase their ROI.

      So now i want to transfer my loan to BOB or HDFC home loan both interest are same i.e. 10.25%.

      From Interest Rate(%)
      2-Dec-13 11
      28-Aug-13 10.9
      14-Mar-13 10.4

      Loan Type Rate Based
      Sanctioned Loan Amount (in `) 14,71,757
      Disbursed Amount (in `) 14,71,757
      Installment (in `) 14,643.00
      Current Interest Rate (%) 11
      Loan Term (Total) in Months 274
      Loan Term (Balance) in Months 254

      After that indiabulls give me offer to reduce interest rate from 11.0% to 10.25%.

      Charge is -5618
      Outstanding amount-1437943
      Premium-14643
      Current interest rate-11%
      Tenure in month-253
      Tenure in year-21.1

      They give me offer
      Current interest rate-10.25%
      Tenure in month-215
      Tenure in year-17.92

      I save
      Tenure in month-38
      Tenure in year-3.17

      So please guide me what i do?

      Waiting for your favorable response.

      Thanks in advance.

      1. Ashish Garg says:

        Dear Dilip,

        If you shift your loan from Indiabulls to HDFC / BoB, there will be some charges levied by HDFC / BoB such as processing charges etc.

        If Indiabulls is offering you to shift to a lesser interest rate with some nominal charge, please do that (also, see the terms and conditions).

        By reducing your interest rate and keeping the EMI same, you can actually reduce the time period and thus save on valuable money. I had also done that in past by shifting my loan from HDFC to BoB and saved fair amount of money, which I, otherwise, would have paid to HDFC as interest over a period of time.

        Ashish

        1. pateldilip00 says:

          Dear Ashish Garg,

          Thanks again for your reply.

          Please find details of current situation with indiabulls.

          Outstanding Principal Amt:  14,37,943/-
          Remaining Months: 21 Years 1 Months
          Current EMI:  14,636/-
          Current Interest Rate: 11%
          Current Bank: India Bulls

          I search on internet which bank give lower interest and charges.

          But i past this result in this post from excel they not past as a table so i confused how to explain you.

          Can you give your email so i can send mail to you as a excel sheet for your reference.

          As per your suggestion i call to indiabulls for option for effect of reduce interest rate.

          They said to me first of all you pay charge then i enter the data in system after that they said to me how much tenure reduce and how much premium reduce.

          Regards,
          Dilip

          1. Ashish Garg says:

            Dear Dilip,

            As per the information you have shared, I can understand the following:

            1. Your outstanding principal amount is Rs.14,37,943
            2. Balance tenure is 251 months
            3. Current Rate of Interest is 11%
            4. EMI is Rs.14,636 per month

            Now in this case you will have to pay an interest of Rs.22,40,000 approx in next 251 months if the interest rate remains same.

            If you are getting 10.25% rate of interest from hereon, you will have the following calculations

            Balance Principal: Rs.14,37,943
            EMI: Rs.14,636
            Balance Tenure: 215 months
            Tenure saved: 36 months (or 3 years)
            Total interest payable in 215 months will be Rs.17,08,000

            Interest Saving of Rs.5,32,000 (if interest rate remains same)

            You may see that you can save a fairly good amount on interest by shifting to reduced rate of interest. In case you are able to increase your EMI to about Rs.15,000 your interest payment over the whole tenure will reduce to Rs.15.5 Lakhs and tenure will reduce to about 16.5 yrs.

            This is as per my understanding, you may also cross check with Indiabulls and other bank.

            Ashish

            1. pateldilip00 says:

              Dear Ashish Garg

              Many many thanks to you to give your email id.

              As per your suggestion i compare and crosscheck charges and benefit of indiabulls and other bank i send on your email id of excel sheet with comparison indiabulls and other bank for charges and benifit.

              Based on the excel sheet and talk with indiabulls i decided that to go with indiabulls to reduce my interest rate instead of transfer my loan to other bank.

              Please give your final opinion for my decision.

              Waiting for your favorable response.
              Thanks in advance.

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