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RD is like a piggy bank. In this scheme, a fixed amount has to be deposited every month. After maturity, you get the entire amount back along with interest. This scheme is good for those who do not want to take any kind of risk on their investment and want to collect money from small savings. You get the option of Recurring Deposits both in the bank and post office.

RD in the bank has a tenure of 1 year to 10 years, you can choose the period according to your convenience. But post office RD is for 5 years. However, the interest on this is good, so you can accumulate a good amount of funds in 5 years. Currently, 6.7 percent interest is being given on Post Office RD. If you have started this RD, then do not make a mistake, otherwise, you will incur a huge loss. The interest rate on RD will directly decrease to 2.7%.

This mistake will cause loss

If you have invested in a 5-year RD, then do not make the mistake of breaking it before maturity. If you close the RD pre-maturely, then the interest rate on RD will directly decrease to 2.7%. In such a situation, interest will be given equal to that of Post Office Savings Account. Currently, 4% interest is being given on Post Office Savings Account. Then you will get a return of 4% interest, not 6.7%.

When can you get pre-mature closure done

As per the rules, the Post Office RD account matures after 5 years, but if needed, you can close it midway after three years from the date of opening the account. But if you close this account even a day before the maturity period, then you are given interest equal to that of a Post Office Savings Account. Keep in mind that permission to close the account before time is not given for the period of advance deposit.

Facility of extension also

If you want to continue your RD account even after five years, then you can get the account extended. For this, you will have to give an application in the post office. But the same interest rate will be given on your extended RD account which was given at the time of opening it. The extended account can be closed at any time. But on closing, for full years, RD interest rate will be applicable and for a period of less than one year, Post Office Savings Account interest rate will be applicable. Therefore, try to close the extended account after maturity only after completion of one, two, three years etc.

Who can open RD account

Any person who is 18 years of age can open an RD account for himself in the post office. On the other hand, the guardian can open this account in the name of the child. If the child is more than 10 years of age and he can sign alike, then he can open a post office RD account in his name. Apart from this, two to three people can also open a joint RD account for themselves.