Calculation of interest on RD is done on the basis of regular deposit.
Recharging deposit (RD) is a popular saving instrument, which gives you permission to invest a certain amount regularly to deposit sufficient funds over time. For this, it is also necessary to deposit your RD installment on time. But if your installment is missed then it is important to understand what will be the results. Not paying may impose penalty, interest income may be reduced and even the account can be closed. Come, let us know what effect the installment is missed.
What is loss
Loss of interest
Calculation of interest on recurring deposit (RD) is done on the basis of regular deposits. If a installment is missed, the earned interest will be less than expected, which will reduce your overall returns.
Impact on financial assets and planning
To create adequate savings funds, it is necessary to contribute regularly to your RD. Not paying a installment can disrupt your financial plan and delay in achieving your financial goals.
Loss of image with bank
Constant missing on your RD installments can have negative effects on your relationship with the bank. Although this will not affect your credit score, due to poor track records, the bank’s desire to provide some financial products or services in future may be affected.
What to do when installment is missed
Pay the missed installment immediately
If your bank allows it, then pay any penalty along with the missing installment as soon as possible. This initiative can reduce your interest income and impact on maturity value.
Review your financial plan
If you find it challenging to pay regular RD, then perhaps the time has come to review your financial plan. Consider adjusting your budget, reducing unnecessary expenses or reducing your RD installment amount if possible.
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