What Happens to RD After Maturity?

Explore what happens after your RD matures—withdraw, renew, reinvest, convert to FD, or donate. Choose the option that suits your financial goals with help from Vakilsearch insights.

What Happens to RD After Maturity?

Once a Recurring Deposit (RD) reaches maturity, the investor can either withdraw the total amount (principal + interest), renew the RD, convert it to a Fixed Deposit, or opt for several other flexible options provided by the bank. The course of action post-maturity depends entirely on the investor’s financial goals.

A Recurring Deposit (RD) is a preferred investment tool for those aiming to save systematically over a fixed tenure. It involves depositing a fixed sum monthly, with interest accruing until maturity.

Let’s explore the various options investors have once their RD matures:

Renewal of RD

Renewing the RD is one of the simplest post-maturity choices. It lets investors reinvest the amount in the same RD scheme under the same or modified terms. Renewal can be done online or by visiting the bank.

Closure of RD

Investors may opt to close the RD and withdraw the full amount with interest. This is usually penalty-free after maturity, but it’s still advisable to verify with the bank.

Extension of RD

Some banks allow extending the RD’s tenure. A written request is usually required, and the extended RD may carry a different interest rate. This helps in tailoring the investment to evolving goals.

Auto-Renewal of RD

For convenience, most banks offer auto-renewal. On maturity, the RD renews itself for the same duration, provided sufficient funds are available in the linked account.

Conversion to Fixed Deposit

If investors wish to shift from monthly contributions to a lump-sum deposit model, some banks offer RD-to-FD conversion. The interest rate applicable will be based on current FD rates.

Partial Withdrawal of RD

Certain banks permit partial withdrawals post-maturity. A portion of the maturity amount can be withdrawn, while the rest remains invested—possibly at a new interest rate.

Transfer to Savings Account

An easy and commonly chosen option is transferring the maturity amount and interest into a savings account, which ensures immediate liquidity for other financial need

Reinvest Interest Earnings

Another smart move is reinvesting only the interest earned—either into the same RD or a different scheme. Some banks even offer auto-reinvestment to grow earnings further.

Open a New RD

Using the maturity amount to start a new RD is a great way to continue saving systematically. It ensures regular savings with guaranteed returns based on selected tenure and rate.

Donate the Maturity Amount

For philanthropically inclined investors, donating the maturity sum or a portion of it to a charitable organization can be a fulfilling option. Some banks facilitate such donations directly.

Conclusion

After your RD matures, a variety of options are available: renewing it, closing it, converting it to another scheme, reinvesting the interest, or even donating the proceeds. The ideal choice should align with your broader financial goals. Always consult your bank or financial advisor before making a decision.

Vakilsearch offers legal and financial services and provides an RD Calculator that helps estimate potential returns based on your monthly deposit, tenure, and interest rate.