Wednesday, September 23, 2020
Home Finance Check Eligibility Criteria and Know How to Calculate the Maturity Amount

Check Eligibility Criteria and Know How to Calculate the Maturity Amount

Check Eligibility Criteria and Know How to Calculate the Maturity Amount

A recurring deposit (RD) makes sense to build up savings in the long term with regular monthly deposits. Just deposit INR 10 or more monthly for a maximum of 120 months, and help yourself to decent proceeds, including principal and applicable interest. It’s safe, easy and effective.

Depending on the lender, RD interest rates can be between 5% and 7.85%. That’s comparable to the best FD rates and the highest for any savings scheme. The interest rates are also subject to the tenor of the deposit. You enjoy the highest interest rates in the medium-term tenors and the lowest in the long-term tenors. For starters, short-term tenors span from 6 to 12 months, a medium-term from 12 to 60 months and long term tenors from 60 to 120 months.

Considering investing in an RD but don’t know whether you are eligible? Let’s help you with that.

Eligibility criteria:

The RD aims to help develop a habit of savings across all ends of the socio-economic scale, especially the middle and low-income groups. That’s why these term deposit schemes have broad eligibility criteria. Note that, the eligibility requirements are subject to the bank or NBFC it’s offered by. However, some overlap is always there. Typically, you need to be:

  • An Indian citizen
  • Aged 10 years or above
  • Any government organization
  • Any private organization (trust, society, corporate or commercial)

It’s worth mentioning that children aged 10 or below are also eligible for RD account under the responsibility of their natural or legal guardian. So, virtually everyone regardless of age is eligible. The documentation is also simple, making RD a hassle-free way to start saving.

You’ll need to fill up an application form available with the bank you select for your RD account. The application should be backed by two passport size photographs and valid address proof and ID proof. It’s advisable to check your eligibility, documentation and applicable interest rates with the bank before jumping into the RD bandwagon. That’s vital for getting the best FD rates.

How to calculate your maturity amount?

Now that eligibility and documentation requirements are out of the way, it’s time to learn how to calculate the interest rates and proceeds you’ll be earning at the end of the term deposit.

  • Interest rate calculation:

The standard formula to compute your total RD interest earnings across tenors is: I = {{P x n (n + 1) r} / {12 x 2 x 100}}}. Here, ‘I’ stands for the total interest rate, ‘P’ for the principal, ‘n’ for months involved in the tenor, and ‘r’ for interest earned yearly.

  • Maturity amount calculation:

Once you calculate the interest, apply the following formula to know your maturity amount. M = P (n) + I. Here, ‘M’ is the total proceeds (maturity amount, including principal and interest), while ‘P’ denotes the principal, ‘n’ months involved in the tenor, and ‘I’ total interest earned.

What is fixed deposit and RD policy for premature withdrawals, you might wonder. Well, breathe easy, as most banks allow for premature withdrawal, with a penalty though. The interest rate and the premature withdrawal amount depend on the tenor completed.


70
/ 100


SEO Score

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Facts About Pablo Picasso – Fun Facts About Pablo Picasso

One of the most famous artworks of all time, Pablo Picasso's Les Demoiselles d'Avignon is a masterpiece and a perfect example of Cubism. What...

Know Every Thing about Brazilian Butt Lift (BBL)

BBLs start with liposuction, where a surgeon will suck fat out of areas in the body and then process and re-inject it into the...

5 National Parks To Visit In 2020

There are a lot of ways to deal with segment out the public park machine—greatest, littlest, most extreme visited, least visited, and so forth....

Breast reduction near me the easy way to avail a good breast surgery

Breast reduction is the process in which extra fat and tissues are removed from the breasts. Many women all over the world face serious...

Recent Comments