October 18, 2010 6:33 pm
I want to know about RD account . Can you please tell how will help in saving money for long term ans short term.
Can I save tax on it . Will you recommend user to open RD Account.
In Recurring deposit you have to remit a fixed amount at monthly intervals for a predetermined period (from 6 months to 120 months). Interest is calculated on quarterly basis depending upon the period – on the applicable rate for fixed deposits. No TDS for Recurring Deposit accounts. You can also take a loan up to 75% out of the savings made by you with 1% over the interest given to you.
A variant of the RD is Variable Recurring Deposit. In this the instalments are variable. Let us assume the first instalment is made for 2000/-. Subsequent instalments can be remitted for amounts in multiples of the first instament. (50 times the initial instalment – this varies with different banks). Variable RD is better in the sense, we can increase the instalments depending on our monthly surplus.
Recurring Deposit is an account where in every month you deposit a fixed amount into it. In case of FD you invest lump-sum. The interest earned will be slightly less than FD but more than the normal savings account. Suppose you have 25k in your savings account and earning 4% p.a., you can start RD with 2k per month, you will earn more returns than savings account at the end of the year. I personally invest every month in RD.
You cannot save tax on it. For those who do not have knowledge in shares/MF can invest in RD.
I think RD does not attract any TDS on the interest like FD… Correct me if I am wrong, but I got the info from http://www.corpbank.com/asp/0100text.asp?presentID=1700&headID=96
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