Though
there are many investment options available in the financial market these days,
people stick to investing in banks as their primary source of investment. The
role of banks in serving risk free returns to the customer is what makes them
gain more trust and customers. As said, fixed deposit and recurring
deposit bank account are the most popular risk-free investment
options in the bank. If you are one among those confused investors between
fixed and recurring deposit account, this article helps you get a clear
picture.
What is a fixed deposit account?
It is a type of bank account wherein the investor must
deposit a lump sum amount once. The amount depends on the customer requirement
or bank’s minimal deposit criteria, whichever is higher. The amount gets
deposited for a fixed period for a period anywhere between seven days to 10
years. Till maturity, the customer receives the interest on the amount credited
on a monthly or a quarterly basis. Higher the amount, greater will be the
returns. The aim of opening an FD account is to convert the idle money or savings
to earn a higher profit. Compared to the savings bank
account, the interest rates are higher in a fixed deposit account.
What is a recurring deposit account?
Recurring deposit is partially like an FD account. The only
difference is that the customer should choose a period that ranges from a year
to 10 years and can deposit a fixed amount every month and earn monthly. The
interest in the RD account remains fixed throughout the period.
How to open these accounts?
Both online and offline options are available to open bank accounts of
fixed and recurring. For a fixed deposit account opening –
Log in to the respective website of your bank
From the ‘Deposit’ menu, click ‘Fixed Deposit’ and select ‘Fixed
Deposit Account Opening.’
On the page, select ‘From’ account list, and choose a source
account.
From the ‘FD type list,’ select the amount you are
depositing.
From the ‘Placement period, select the tenure of the account
for the FD.
How to do online account opening for RD?
Though each website differs in its interface, the options
and procedures are the same.
Log in to your net banking account and select “type of
account.’
From the list, choose ‘RD account’ and select ‘online
account opening.’
Provide the details like how much amount you wish to deposit
and the ‘Tenure of deposit’ (how long you want to hold your RD scheme active).
On completion, you receive the link of your savings account.
By doing so, you can regularly transfer the funds from the savings to the RD
account or ask the bank to make the payment by the due date of each month
automatically.
Inference:
So which one to choose? It solely depends on the investor’s
requirements. If you do not wish to deposit a fixed amount monthly but want to
earn returns, then the FD account is best preferred. But if you are looking for
a flexible option of getting monthly interest on the amount deposited, then RD
would be of the best choice.
