The
interest rates on RDs depend on which category you fall under and your choice
between different banks. Senior citizens earn a higher rate of interest when
compared to regular citizens. There are schemes offered to minors, students and
parents to save for the children. These schemes may carry higher rates of
interest. There are also special schemes devised to help people reach their
goals. Your interest rates also depend on the type of account you hold. A
regular savings account will generally earn a higher rate of interest than an
NRE/NRO account. The current interest rates available from different banks
range between 4.5% and 7.90% per annum.
Types of Recurring
Deposit Interest Rates
Regular Savings Scheme - Banks offer recurring
deposits to Indian citizens above the age of 18 years. Customers can choose to
deposit a fixed sum of money for a period of time, usually between 6 months to
10 years. Interest can be computed on simple or compound basis. At the end of
the tenure, the lump sum amount can be withdrawn. Some schemes allow you to
reinvest the money. You can open a recurring deposit for as little as Rs. 10
per month. The interest rates on the regular recurring deposits range between
7% to 8% per annum.
Junior RD Schemes - Bank’s also offer recurring
deposit schemes for kids. Parents or guardians can open these deposits for
their children to start saving for their future, education and other needs.
Students can also avail of these deposit schemes. Learning to handle finances
and the importance of saving at a young age will help inculcate a smart sense
of money. The interest earned on these deposits will either be equivalent to
the regular RD schemes or be higher to encourage saving amongst the youngsters.
Senior Citizens RD Schemes - Banks offer higher rates of
interest for senior citizens. Usually, 0.50% per annum is given over and above
the prevailing interest rate. The interest rates range between 7.5% to 9.25%
per annum. There are also schemes available that are designed to help senior
citizens during their retirement and old age.
NRE/NRO RD schemes - NRE and NRO recurring
deposit accounts may be offered a lower interest rate. Furthermore, senior
citizens who hold NRE/NRO accounts will not be offered the additional interest
rate. These accounts attract around 7.50% interest per annum.
Special RD Schemes - Banks offer different
schemes designed to suit the needs and capabilities of a variety of people.
These schemes generally carry a higher rate of interest as your goal is more
specific. ICICI Bank offers the iWish deposit which allows you to contribute
various amounts of money to your RD account. Furthermore, other people can also
contribute to help you reach your goals. There are RD schemes with free life
insurance available. With certain schemes, you are allowed to withdraw the
money in part without breaking the full deposit. Other schemes reward you with
a bigger lump sum amount which makes it a worthwhile investment.