RDA stands for Recurring Deposit Account. It is a type of savings account that allows you to deposit a fixed amount of money at regular intervals, typically monthly.
Here's a breakdown of the key features of an RDA:
- Regular Deposits: You agree to deposit a specific amount of money at fixed intervals, usually monthly.
- Fixed Tenure: RDAs have a specific maturity period, ranging from a few months to several years.
- Interest Accrual: Interest is calculated on the deposited amount and added to your account at the end of each deposit cycle.
- Higher Interest Rates: Generally, RDAs offer higher interest rates compared to regular savings accounts.
- Maturity Benefits: At the end of the tenure, you receive the total amount deposited plus accumulated interest.
Benefits of an RDA:
- Financial Discipline: Encourages regular savings.
- Higher Returns: Offers better interest rates than savings accounts.
- Goal-Oriented Savings: Useful for achieving specific financial goals like buying a car, house, or funding your child's education.
- Risk-Free Investment: RDAs are considered a safe and secure investment option.
Examples of RDA:
- You decide to save ₹10,000 every month for 2 years in an RDA with a 6% interest rate. At maturity, you will receive the total amount deposited (₹240,000) plus accumulated interest.
- You can use an RDA to save for your child's future education or a down payment on a house.
