Maximise Returns with Best Recurring Deposit Schemes

Remember the piggy banks we had in our childhood? Every time we received a coin or a note from our parents, we would diligently put them in the piggy bank. The idea was to slowly save money to buy our favourite items - books, toys, etc. Think Recurring Deposit (RD) as a piggy bank - the only difference the money you put in grows with interest - helping you save for bigger goals. However, not all RDs offer same benefits. So, how do select one?

In this blog, we have shared the factors you could consider to find the best Recurring Deposit scheme that aligns with your financial goals. Let's begin!

Key Factors to Consider When to Select the Best RD Scheme

1. Interest Rates

Higher interest rates mean higher returns. Banks like Ujjivan offer high-interest rate RDs allowing you to grow your investments with time. The interest is generally compounded quarterly, meaning the accrued interest also earns interest. 

2. Tenure Flexibility

RDs generally have tenures ranging from 6 months to 10 years. Select a tenure that aligns with your savings goals—shorter tenures may be suitable for immediate needs, while longer ones can help build a substantial corpus.

3. Minimum Deposit Requirements

Different banks have varying minimum deposit amounts, starting as low as ₹100 to ₹500 per month. Ensure that the minimum deposit fits your budget and financial situation. You can start investing in Ujjivan Small Finance Bank Recurring Deposit with just ₹100.

4. Compounding Frequency

Most RDs compound interest quarterly, which can enhance your overall returns. Understanding how compounding works can help you choose a scheme that maximises your earnings.

5. Withdrawal Policies

Most RD schemes do not allow premature withdrawals without penalties. Review the withdrawal policies to ensure they align with your liquidity needs. However, Ujjivan SFB doesn't charge any premature RD closure fee for withdrawals made after 6 months from the time of deposit.

6. Additional Feature

Some banks offer flexible RDs where you can vary your monthly contributions. These features can provide added convenience and adaptability.

Which Bank Provides Best Recurring Deposit Interest Rates?

Let's check out the RD interest rate offered by Ujjivan Small Finance Bank across tenures.

Disclaimer: Interest rates are subject to periodic changes and the applicable interest rates will be given based on the date and time of receipt of the funds by the Bank.

Examples on Selection of RDs

To illustrate how the interest rate factor comes into play, let's consider a few scenarios:

Scenario 1: Ramesh wants to save for a down payment on a house over the next 5 years. He has a steady income and can afford to save ₹10,000 per month. Ramesh is looking for an RD scheme that offers competitive interest rates and allows him to customise his monthly installment amount if needed.

In this scenario, Ramesh should look for banks that offer higher interest rates on their RD schemes and also provide flexibility in altering the monthly installment amount. By comparing different options, he can choose an RD scheme that aligns with his goals and requirements. In this case, he might choose Ujjivan SFB for the superior interest rates they offer. 

Scenario 2: Meera is planning her child's education fund and wants to save ₹5,000 per month for the next 10 years. She is looking for an RD scheme that offers a high-interest rate and allows premature withdrawal without excessive penalty charges.

Meera should focus on banks that offer attractive interest rates on their RD schemes and have reasonable penalty charges for premature withdrawal. By selecting a bank like Ujjivan, she can ensure her savings grow optimally while having the flexibility to withdraw funds if required.