In the present business and marketing economy, fixed deposits and recurring-deposit investments are popular among current investors. The merit here in these deposits is their fixed returns. Both are more or less similar in type and features but, some key differences are to be considered before opening an account. It can be confusing in some situations, so the different aspects need to be acknowledged. There are some basic differences in both which can be understood easily. Though the interest rates in both can be overlapping at times. The best part about it is that banks provide both facility which is fixed deposit accounts and recurring deposit account.
What is the meaning of a fixed deposit?
It is the kind of investment where money is kept for a long period to gain a fixed interest rate. The customer can open savings account and flexibly makes deposits at their convenience and feasibility. This primary feature acts as the initial difference between the two deposits, and the customer chooses according to their needs, and grounds. The tenure can be from 6 months to 10 years, which differs for every bank. The amount can be either received monthly or at maturity.
What is recurring deposit?
Recuccing deposit will be an account for years to come where a person credits this account with a specific sum every month from his savings account. Bank savings interest rates are lesser than recurring rates.
Key differences:
· The amount of investment is large in fixed deposits but is substantially lower in recurring investments. It is a basic difference between these types of investments.
· Deposit period tenure for a fixed account is 7 days to 10 years, whereas, in a recurring account, it is: 6 months to 10 years. The person can select the time duration in fixed deposits and cannot do so in a recurring account.
· The bank saving interest rate is higher for fixed investments than for recurring accounts.
· The due date of the scheduled payment cannot be skipped in fixed deposits, as it is deposited in a lump sum. The customer can choose not to pay for 6 consecutive months in recurring deposits, but the bank will close their account in such cases.
· These are fixed-income investments and can be beneficial to people who choose them according to their needs and requirements.
· A loan can be provided in both accounts and has no hassle-some documentation processing. It is easy and simple to avail of this facility with the help of a few simple steps.
It is solely upon the individual to read every terms and condition and learn about each type of account before choosing it for their future investments.