New Delhi: Recurring deposits (RD) are considered one of the best investment options. The scheme is very popular because it does not require huge sums of money to invest. Deposits can be made in installments without putting any lump sum in RD. It offers savings as well as guaranteed returns.
More importantly, R&D is unaffected by market fluctuations. However, it is important to deposit the money on time. Not depositing money on time affects returns.
RD is a system in which a fixed amount must be deposited each month. The amount to deposit and the duration of it are not decided until the opening of the RD. It can be deposited in cash or by check. Failure to deposit the amount on time may result in low returns.
Impact of late filing
The bank may impose a penalty if the RD amount is not deposited at the scheduled time. Each bank has different rules on this. The RD account can also be closed if someone does not deposit the amount for consecutive months. This account remains closed until the payment of contributions. However, there is no penalty for not depositing the amount in the Flexible RD account for a few months.
How to avoid penalties
There are several ways you can avoid RD penalties. You can use the automatic debit function. In this, the RD amount from your bank account will be automatically deposited every month. But make sure that your bank account has enough money on the date the amount is debited.