Post Office RD: Like FD, RD is also considered a better means of investment. In FD you have to deposit a lump sum amount, whereas in RD you have to pay a fixed amount monthly for a fixed period of time, on maturity you get the RD money along with interest.
You get the facility of RD i.e. Recurring Deposit Account-RD scheme at both post office and bank. In the bank, you can start it for 1, 2, 3 or 5 years, but if you start the RD scheme in the post office, then you will have to deposit the amount continuously for 5 years.
However, you get very good interest in Post Office RD. At present interest is being given at the rate of 6.5%. Apart from this, one of its advantages is that in difficult times, you can withdraw some amount from the money deposited in RD as a loan. However, people are not aware of the loan facility against RD. Let us tell you about it.
Loan rules against post office RD
If you deposit 12 consecutive installments in the five-year recurring deposit scheme of the post office, then you get the loan facility. That means, to avail this facility, you will have to deposit the amount continuously for at least one year. After one year, you can take a loan up to 50 percent of the amount deposited in your account. You can pay the loan amount in lump sum or in equal monthly installments.
How much interest will have to be paid
Interest on the loan amount will be applicable at 2% + RD interest rate applicable on RD account. Interest will be calculated from the date of withdrawal to the date of repayment. If you do not repay the loan on time after taking it, then when the RD matures, the loan amount along with interest will be deducted from it. To avail the facility of loan against RD, you have to fill the application form along with the passbook and submit it to the post office.
Benefits of Post Office RD
- Post Office RD can be opened with Rs 100, this is an amount which anyone can easily save. There is no maximum investment limit in this.
- You get the benefit of compounding interest on Post Office RD. Interest is calculated every quarter. In such a situation, you get a good profit in the form of interest in 5 years.
- A person can open any number of accounts in the Post Office Recurring Deposit Scheme. In this, apart from single, joint account can be opened for up to 3 persons. There is a facility to open an account in the name of the child also.
- The maturity of RD account is 5 years. But, pre-mature closure can be done after 3 years. It also has the facility of nomination. At the same time, after maturity, RD account can be continued for further 5 years.