Know About RDs and RD Calculation
Recurring deposit or rd is the financial instrument that is being chosen by most of the people. RD gives people a host of features. RD is always calculated using a RD interest calculator. Also, it has been witnessed that the amount that matures using RD interest calculator is way more than the other type of deposits or plans. Generally, almost all the financial institutions offer this special type of term deposit for its esteemed customers. But, there are few factors that are to be kept in mind prior to a RD deposit. A RD is specially designed plan for all the people who are willing to pay easy installment for building their savings in a planned and systematic order.
The recurring deposits have generally been witnessed to have a time period that lies between six months to ten years at the most. Also, there is a limitation to the amount that could be deposited for a RD. The depositor should be aware of the fact that they need to deposit the chosen amount on a particular date of every month. Failing to deposit that premium amount will result in a lower amount or less maturity value than what was promised at the time of investment.
Comparison between the RD of Different Banks
Calculation of RD is purely based on the proper usage of the RD interest calculator. However, one should also know that whatever interest is being earned from a RD is subjected to taxes like TDS or the Tax Deduction at Source and may be few others if applicable. RD is basically centered on two main aspects and they are the time span of the RD account that is to be chosen by the depositor and also the rate of interest. In case of a RD, the rate of interest is being divided by twelve, i.e. the number of months. The interest is then applied on the current principal of that particular month. The principal keeps on changing with months. But as known to people, the RD rates highly varies on different factors and the most important of them is it changes with a change in financial institutions. But the principle on which a RD interest calculator works remains same. The basic thing that one must know is the rate of interest that the specific bank or the financial institution is offering to the depositors. Along with that, one must also compare the monthly deposits and what the principal amount will be at the end of each year. Besides this, one must also take into account the duration for which they are investing. It has been found that investing with the bank which is offering the highest rate of interest on a particular amount and time span is always more profitable in comparison with the others since the interest is always compounded on a quarterly basis. The maturity value is simply calculated on the basis of the monthly installments, the number of quarters, and the rate of interest as provided by the bank. However, one must also consider the fact that it in many cases short term deposits is much profitable in comparison with the long term deposits. This is the reason why one must always compare the interests using the RD interest rate calculator before investing their hard earned money. To sum up, one must know the rate of interest for the different banks for a particular time period in accordance with the principal amount and then one should very efficiently compare the interest rates using a RD interest rate calculator.