Recurring Deposits (RDs)
are a popular savings instrument in India, allowing you to invest a fixed sum regularly to accumulate a substantial
corpus over time. However, it's essential to understand the consequences of failing to deposit your RD instalment on
time. Missing a payment can lead to penalties, reduced interest earnings and even account closure.
Impact of missing an RD instalment
- Loss of interest: The interest on RDs is calculated based on regular deposits. If an instalment
is missed, the interest accrued will be less than expected, reducing your overall returns.
- Impact on financial wealth and planning: Regular contributions to your RD are vital for building
a substantial savings corpus. Missing an instalment can disrupt your financial planning and delay achieving your
financial goals.
- Reputation with the bank: Consistent defaults on your RD instalments might negatively impact your
relationship with the bank. While it won't affect your credit score, a poor track record could influence the bank’s
willingness to offer you certain financial products or services in the future.
Managing your RD efficiently
- Set up automatic payments: One of the easiest ways to ensure timely payments is to set up an
automatic debit from your Savings Account to your RD Account. This way, you don’t have to remember the due date
every month, and you can avoid late fees.
- Choose a realistic instalment amount: When setting up an RD, select an instalment amount that
aligns with your financial capacity. Overestimating your ability to save can lead to difficulties in making
consistent payments.
- Utilise mobile banking alerts: Many banks offer SMS / email alerts to remind you of upcoming RD
instalment due dates. These alerts can help you stay on track and ensure payments are made on time.
Rebuilding after a missed RD instalment
- Pay the missed instalment as soon as possible: If your bank allows it, pay the missed instalment
along with any penalties at the earliest opportunity. This action can minimise the impact on your interest earnings
and maturity value.
- Review your financial plan: If you find it challenging to make regular RD payments, it might be
time to review your financial plan. Consider adjusting your budget, reducing unnecessary expenses, or even lowering
your RD instalment amount if possible.
Also Read: Recurring Deposits: A smart way to automate savings
Conclusion
Understanding what happens if the RD instalment is not deposited on time is crucial. Missing a payment can lead to
loss of interest, disruption in your financial planning and even affect your reputation with the bank. However, with
careful planning and the right tools, you can avoid these pitfalls and ensure your RD continues to grow your wealth as
intended.
If you're looking for a reliable and flexible RD plan, consider opening an Axis Bank Recurring Deposit. With a
minimum investment of just ₹500 and flexible tenure options ranging from 6 months to 10 years, Axis Bank's RD is
designed to help you build your savings systematically. Plus, you'll enjoy Axis eDGE Rewards as you save, making your
financial journey even more rewarding.
Disclaimer: This article is for information purpose only. The views expressed in this article
are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or
the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking
any financial decisions based on the contents and information. Please consult your financial advisor before making
any financial decision
