Pravien Raj
31 July 2024 4,963 4 mins read
This article explores the various options available to investors after the maturity of a recurring deposit (RD), including reinvestment, donation, and transfers to savings.
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A Recurring Deposit (RD) is a popular investment option for individuals looking to save money over a fixed period. It is a form of fixed deposit wherein individuals deposit a fixed sum of money each month for a fixed period.
The maturity of an RD refers to the end of the fixed deposit period. After the maturity of an RD, the investor has various options available to them. This article will explore what happens to an RD after maturity.
Table of Contents
Renewal of RD
One of the most common options available to investors after the maturity of an RD is to renew the RD. Renewal of an RD allows an investor to continue investing in the same RD scheme with the same terms and conditions.
Investors can choose to renew their RD for the same duration or for a different duration, depending on their investment goals. Renewal of RD is a hassle-free process, and investors can choose to renew their RD online or by visiting their bank branch.
Closure of RD
Another option available to investors after the maturity of an RD is to close the RD. Closing an RD refers to withdrawing the entire amount invested in the RD along with interest earned.
Investors can close their RD online or by visiting their bank branch. In most cases, banks do not charge any penalty for premature withdrawal of RD after maturity. However, checking with your bank regarding the penalty charges for premature withdrawal is important.
Extension of RD
Some banks offer the option of extending the maturity period of an RD. Investors can choose to extend the maturity period of their RD for a fixed period by submitting a written request to their bank.
The interest rate offered on the extended RD may differ from that offered on the original RD. Investors can choose to extend their RD for the same or different duration depending on their investment goals.
Auto-Renewal of RD
Most banks offer the option of auto-renewal of RD. Auto-renewal of RD refers to the automatic renewal of the RD on the date of maturity for the same duration as the original RD. This option is convenient for investors who wish to continue investing in the same RD scheme without the hassle of renewing the RD manually.
However, investors must ensure that they have sufficient funds in their savings account on the date of maturity to facilitate the automatic renewal of RD.
Conversion to Fixed Deposit
Some banks offer the option of converting an RD into a fixed deposit (FD) after maturity. This option is beneficial for investors who wish to continue investing in a fixed deposit scheme instead of an RD scheme. The interest rate offered on the FD may differ from that offered on the RD.
Partial Withdrawal of RD
Some banks offer the option of partial withdrawal of RD after maturity. Investors can choose to withdraw some of their investment while leaving the rest to continue earning interest. The interest rate offered on the remaining investment may differ from the original RD’s.
Transfer to Savings Account
After the maturity of an RD, investors can choose to transfer the entire amount, including the interest earned, to their savings account. This option is suitable for investors who need immediate access to their funds or who want to use the money for other purposes.
However, it is important to note that the interest earned on an RD is usually higher than that earned on a savings account.
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Reinvest Interest Earnings
Another option available to investors after the maturity of an RD is to reinvest the interest earnings in the same RD or a different investment option. This option can help investors maximize their returns by earning interest on the interest earned during the RD’s tenure. Some banks also offer the option of reinvesting the interest earnings automatically.
Open a New RD
Investors can also open a new RD with the maturity amount and interest earned. This option is suitable for investors who want to continue saving money over a fixed period and earn a guaranteed return on their investment. Investors can choose the duration and interest rate of the new RD based on their investment goals.
Donate the Maturity Amount
Investors can choose to donate the maturity amount of their RD to a charity or a non-profit organization. This option can help investors contribute to a good cause and positively impact society. Some banks also offer the option of donating a part of the maturity amount to a charity or non-profit organization.
Conclusion
After the maturity of an RD, investors have several options available to them, including transferring the maturity amount to a savings account, reinvesting the interest earnings, opening a new RD, donating the maturity amount, and investing in a different investment option.
It is important to consider the pros and cons of each option and choose the one that aligns with your investment goals and financial situation. Investors should also consult their financial advisor or bank representative to make an informed decision.
Vakilsearch is a company that provides legal and financial services to individuals and businesses. Vakilsearch offers an RD calculator, which enables investors to determine the returns on their RD investments. The calculator considers the investment amount, tenure, and interest rate, providing an estimated return on investment at the end of the investment period.
Also, Read:
- Gratuity Payment Rules
- About SIP Investment
- How Does SIP Calculator Works?
