Post offices not only offer postal services but also allow you to make and grow your savings. India Post or the Department of Posts, which has a network of 1, 55,015 post offices, provides small savings schemes, insurance services, and old age pension payments, besides the usual postal services. Among the nine savings schemes that India Post provides, recurring deposit or RD accounts offer an interest rate of 6.9 per cent. Post office recurring deposits also offer the facility of rebate on advance installments.
Here are 10 things you should know about post office recurring deposits:
1. You can open a post office recurring deposit scheme by cash / cheque. In case of cheque, the date of deposit shall be the date of presentation of cheque, according to India Post.
2. The subsequent deposit can be made up to the 15th day of next month if the account is opened up to 15th of a calendar month. If the recurring deposit account is opened between 16th day and last working day of a calendar month, the subsequent deposit can be made up to last working day of next month.
3. If the subsequent deposit is not made up to the prescribed day, a default fee at Rs 0.05 for every 5 rupee shall be charged. After four regular defaults, the account is discontinued and can be revived in two months but if the same is not revived within this period, no further deposit can be made, said India Post on its website indiapost.gov.in. If in any recurring deposit account, there is a monthly default amount, the depositor has to first pay the defaulted monthly deposit with default fee and then pay the current month deposit.
4. India Post offers a rebate on advance deposit of at least six installments in recurring deposit accounts.
5. One withdrawal up to 50 per cent of the balance is allowed after one year from RD accounts. It may be repaid in one lump-sum along with interest at the prescribed rate at any time during the currency of the account, said India Post.
6. The interest rate of 6.9 per annum on post office recurring deposit accounts is compounded quarterly. On maturity after five years, Rs 10 deposited in the account every month fetches Rs 717.43.
7. The post office recurring deposit scheme can be continued for another five years on a year-to-year basis.
8. A single recurring deposit account can be converted into joint and vice-versa.
9. A nomination facility is available at the time of opening and also after opening of the recurring deposit account.
10. The post office recurring deposit account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account.