What is Recurring Deposit & How to Calculate its Returns | AU Small Finance Bank

# What is a Recurring Deposit and How to Calculate its Returns?

Saving a small amount regularly is a great way to accumulate funds. But investment plays a crucial role in helping wealth grow. There are a lot of financial instruments that allow you to build wealth. However, choosing the right financial instrument for yourself matters.

If you are not keen on investing in market-linked products, you can consider investing in a Recurring Deposit (RD), which is an ideal option for a conservative investor. RD is a traditional avenue & it guarantees valuable returns in the long run.

Let’s know more about its features, RD interest rate, returns, eligibility & more.

## What is a Recurring Deposit?

Recurring Deposit is the perfect option for safe investors who aim to save for life goals such as children’s education, a vacation, a wedding, or any other life goals. Many individuals invest in this term deposit to earn guaranteed returns at the best interest rates.

## Key Features of RD

Below are some features and benefits of opening a Recurring Deposit with us.

• Just like Fixed Deposits, RD allows you to earn a high-interest rate for a fixed sum every month.
• You can start the RD investment as per your financial capability. The minimum investment amount is as low as INR 100 every month.
• You can invest multiple times as per your requirement.
• Senior citizens (60 years & above) are allocated additional interest of 0.50% over and above the existing RD interest rates offered by the bank.
• Flexible tenures ranging from 3 months to 10 years. So, an RD is suitable for both short-term & long-term savings.
• Avail assured returns on the principal amount saved in the Recurring Deposit.

## How to Calculate Returns from RD?

When it comes to investment, the obvious question is how much returns you will get once the tenure ends. So, if you are curious to know how much fortune you would make from the recurring deposit at the end of the tenure, below is the formula:

M = R[(1+i)^n-1]/(1-(1+i)^(-1/3) )

In the above formula,

‘M’ is the maturity amount
‘R’ is the monthly installment
‘N’ is the number of quarters
‘I’ is the rate of interest/400

## Fixed Deposit vs. Recurring Deposit

Both Fixed Deposits & Recurring Deposits may seem the same to you, but the investments differ in certain aspects. Let’s get to know how:

 Parameters Fixed Deposit Recurring Deposit Minimum Investment Amount Starts with a minimum amount of INR 1000 Invest in RD for as low as INR 100 per month Tenure Ranges from 7 days to 10 years Ranges from 3 months to 10 years Interest Payout Receive interest payout either monthly, quarterly or yearly In RD, one can receive the maturity amount along with interest only at the end of the tenure Investment Method Lumpsum investment at one go Invest a fixed sum every month

## Eligibility Criteria

Both residents Indian or otherwise (NRIs) NRIs can easily open an RD account with us. We are a scheduled commercial bank, and your deposit is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Do you wish to invest in an RD account? You can initiate the process with us today. You can apply for an RD online from the comfort of your home via our Video Banking facility or AU 0101 App/NetBanking. Alternatively, you can also visit our nearest bank branch to get started with the RD account opening process.