Best Interest Rate on Recurring Deposits for Senior Citizens – July 2017

Recurring deposits (RD) with banks are one of the most popular investment options for people with regular income. RD enables to deposit fixed amount every month for a pre-defined period which earns interest similar to Fixed Deposits (FD).

You might want to bookmark this page as the RD interest rates would be updated every month which would help you in better decision making.

All about Recurring Deposits:

• Most banks offer RDs for tenure of 6 months to 10 Years
• The tenure of RD can be in multiple of 3 months
• Senior Citizens get additional interest rate of 0.25% to 0.50% in most banks
• The amount of installment and number of installment cannot be changed after opening of the account
• The interest on RD compounds quarterly
• In most cases the interest rate on RD is similar to Fixed Deposits offered by Banks for similar tenures. However some banks like Bank of India gives 0.5% extra interest rate for RD as compared to FD for similar tenure

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• The minimum deposit amount can be as low as Rs 100 per month, though some banks may have higher limit
• There can be penalty for missing even one installment.
• In case you miss multiple installments the RD can be closed and amount returned to you
• Most banks offer Loan/Overdraft against the amount available in Recurring Deposit. The interest is generally 0.5% to 1% more than that offered to RD.
• No TDS (Tax deduction at source) on interest income
• There are penalty clauses for pre-mature withdrawal similar to Fixed Deposits

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Recurring Deposit Interest Rates:

Following are the highest Interest rates on Recurring Deposits based on duration:

1. The highest interest rate is offered by Bandhan Bank, IDFC Bank, The Ratnakar Bank and Repco Bank  across tenures

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The table below gives the Interest Rates sorted by Bank Name. The best interest rates for all duration have been highlighted.

[box type=”Info” size=”Medium” border=”Full” icon=”info”]Last Updated: July 4 , 2017[/box]

Source: Bank Websites

Disclaimer: The Recurring Deposit Interest Rates keep on changing. You are advised to check the interest rates with banks before making your RD.

Who should open Recurring Deposit?

Recurring Deposit suits people with regular income and who want to accumulate a fixed amount for certain time frame.

It’s also for people who do not have lump sum amount to take advantage of high interest rates. Those can open a long term RD which offers same interest rate as FD and keep on depositing money regularly. But if you need to put a lump-sum amount use fixed deposit.

Tax on Recurring Deposits:

In case of RD the interest received is added to the income and taxed at marginal tax slab.

Since June 1, 2015 banks would deduct TDS at 10% in case the interest on Recurring Deposit is more than Rs 10,000 in the financial year. This interest would be added across all branches of a bank and across all RDs for a customer to calculate the TDS.