Fixed Deposits (FD) and Recurring Deposits (RD) are the two most popular safe-savings options in India. Both are low-risk and offer guaranteed returns — but they suit very different situations.
The Core Difference
An FD is a one-time lump sum locked in for a fixed period. An RD lets you deposit a fixed amount every month for a set tenure. Think of FD as "I have ₹1 lakh now," and RD as "I can save ₹5,000 monthly."
| Feature | Fixed Deposit | Recurring Deposit |
|---|---|---|
| Investment | One-time lump sum | Fixed monthly |
| Best for | Idle lump sum | Monthly savers |
| Interest rate | Slightly higher | Similar / slightly lower |
| Returns | On full amount from day 1 | On each instalment from its date |
How Interest is Calculated
FDs are usually compounded quarterly. A ₹1,00,000 FD at 7% for 3 years matures to about ₹1,22,500. RDs compound each instalment quarterly too, but since money is added gradually, total interest is naturally lower than an equivalent FD lump sum.
🔢 Calculate your exact maturity
Use our free FD and RD calculators to see maturity value and total interest for your numbers.
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Interest from both FD and RD is fully taxable as per your income slab. Banks deduct TDS if interest exceeds ₹40,000/year (₹50,000 for senior citizens). You can submit Form 15G/15H to avoid TDS if your income is below the taxable limit.
Which Should You Choose?
- Choose FD if you have a lump sum lying idle and want the highest safe return.
- Choose RD if you want to build a savings habit from your monthly salary.
- Want higher returns? For long horizons, consider a SIP in mutual funds — historically higher than FD/RD, though with market risk.