Post Office RD Account: How to Start Saving with Rs 100 a Month
Building savings does not always require a large amount of money at once. For people who prefer to invest small amounts regularly, the Post Office Recurring Deposit (RD) scheme offers a structured way to save every month.
Unlike a Fixed Deposit, where the investment is generally made as a lump sum, an RD allows you to deposit a fixed amount at regular intervals. The Post Office RD has a five-year tenure, and the money is returned with interest when the account matures.
One feature that many investors may not know about is the loan facility available against the RD account.
Eligible investors can borrow up to 50% of the amount accumulated in their RD account at that point. The loan can be repaid either as a lump sum or through equal monthly instalments.
This facility can be useful when an unexpected financial requirement arises and the investor does not want to close the RD account.
Interest on the borrowed amount is calculated from the date the money is withdrawn until the date the loan is repaid. Therefore, the cost of borrowing depends on how long the loan remains unpaid.
If the loan is still outstanding when the RD matures, the loan amount along with the applicable interest is deducted from the maturity proceeds.
To apply for the loan, the account holder needs to submit a completed application form along with the RD passbook at the post office.
The interest is compounded quarterly, helping the savings grow over the investment period.
There is no upper limit on the amount that can be invested. This makes the scheme suitable for people who want to build a regular savings habit without committing a large amount at the beginning.
The RD can also be opened in the name of a child, providing an option for parents or guardians to build savings through regular monthly deposits.
The account can also be extended for another five years after maturity. A nomination facility is available as well.
For investors looking for a government-backed savings option that combines regular deposits with a loan facility, the Post Office RD offers several features worth considering. However, investors should understand the applicable terms and interest rates before making a decision.
Disclaimer: Post Office scheme rates and rules may change as per government notifications. Readers should check the latest details and consider their financial goals before investing. NewsPoint does not recommend any investment scheme. This article is for informational purposes only. Consult a qualified financial advisor before making investment decisions.
Unlike a Fixed Deposit, where the investment is generally made as a lump sum, an RD allows you to deposit a fixed amount at regular intervals. The Post Office RD has a five-year tenure, and the money is returned with interest when the account matures.
One feature that many investors may not know about is the loan facility available against the RD account.
Loan Available After 12 Instalments
The Post Office RD scheme allows account holders to take a loan after completing 12 consecutive monthly instalments. This means the loan facility becomes available after one year of regular deposits.Eligible investors can borrow up to 50% of the amount accumulated in their RD account at that point. The loan can be repaid either as a lump sum or through equal monthly instalments.
This facility can be useful when an unexpected financial requirement arises and the investor does not want to close the RD account.
What Interest Is Charged on the Loan?
The interest charged on the RD loan is 2 percentage points higher than the interest rate applicable to the RD account.Interest on the borrowed amount is calculated from the date the money is withdrawn until the date the loan is repaid. Therefore, the cost of borrowing depends on how long the loan remains unpaid.
If the loan is still outstanding when the RD matures, the loan amount along with the applicable interest is deducted from the maturity proceeds.
To apply for the loan, the account holder needs to submit a completed application form along with the RD passbook at the post office.
Post Office RD Interest Rate
The Post Office RD currently offers an interest rate of 6.7% per annum. The scheme requires investors to continue making monthly deposits for five years.The interest is compounded quarterly, helping the savings grow over the investment period.
Start Saving With ₹100
One of the notable features of the Post Office RD is its low entry amount. An account can be opened with a minimum deposit of just ₹100.There is no upper limit on the amount that can be invested. This makes the scheme suitable for people who want to build a regular savings habit without committing a large amount at the beginning.
Multiple Account Options
Investors can open more than one RD account under the scheme. Accounts can be opened individually or jointly.The RD can also be opened in the name of a child, providing an option for parents or guardians to build savings through regular monthly deposits.
Premature Closure and Extension
The normal maturity period of a Post Office RD is five years. However, premature closure is allowed after three years.The account can also be extended for another five years after maturity. A nomination facility is available as well.
For investors looking for a government-backed savings option that combines regular deposits with a loan facility, the Post Office RD offers several features worth considering. However, investors should understand the applicable terms and interest rates before making a decision.
Disclaimer: Post Office scheme rates and rules may change as per government notifications. Readers should check the latest details and consider their financial goals before investing. NewsPoint does not recommend any investment scheme. This article is for informational purposes only. Consult a qualified financial advisor before making investment decisions.
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