How does a recurring account help common people to save money?

1.	How does a recurring account help common people to save money?
Answer» Recurring Deposit Account: It is started to encourage those people who cannot make large deposit in lumpsum. Recurring deposit can be opened with small amount over a specified period, the depositor keeps on depositing a specified sum of money every month. The number of monthly installments may be 12, 24, 36, 48, 60 and so on. After the expiry of the period, the depositor gets back his money along with interest accruing on such deposits. A Pass Book is issued to the depositor, showing the installments deposited by him from time to time. Cheques cannot be drawn to withdraw money from a recurring deposit account. The amount can be withdrawn only on closure of the Recurring Deposit Account. If amount is withdrawn before expiry of the specified period, the rate of interest paid by bank is lower, to the level of interest payable on savings account.

Answer»

Recurring Deposit Account: It is started to encourage those people who cannot make large deposit in lumpsum. Recurring deposit can be opened with small amount over a specified period, the depositor keeps on depositing a specified sum of money every month. The number of monthly installments may be 12, 24, 36, 48, 60 and so on. After the expiry of the period, the depositor gets back his money along with interest accruing on such deposits.

A Pass Book is issued to the depositor, showing the installments deposited by him from time to time. Cheques cannot be drawn to withdraw money from a recurring deposit account. The amount can be withdrawn only on closure of the Recurring Deposit Account. If amount is withdrawn before expiry of the specified period, the rate of interest paid by bank is lower, to the level of interest payable on savings account.

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