New Delhi: Recurring deposits (RD) are considered to be one of the best investment options. The scheme is very popular as it does not require huge amounts of money to invest. Deposits can be made in instalments without putting lump sum money in RD. It provides savings as well as guaranteed returns.
Most importantly, the RD is not affected by market fluctuations. However, it is important to deposit the money on time. Not depositing money on time affects returns.
RD is a scheme in which a fixed amount has to be deposited every month. The amount to be deposited and the duration of it is decided only at the time of opening the RD. It can be deposited with cash or cheque. Not depositing the amount on time can lead to low returns.
Impact of non-timely deposit
The bank may impose a penalty if the RD amount is not deposited at the scheduled time. Each bank has different rules on it. The RD account may also be closed if someone does not deposit the amount for months in a row. This account remains closed until the dues are cleared. However, there is no penalty for not depositing the amount on the Flexible RD account for a few months.
How to avoid penalties
You can avoid penalties on RD in several ways. You can use the Auto Debit Facility. In this, the amount of RD from your bank account will be automatically deposited every month. But make sure that your bank account has enough money on the date when the amount is debited.