Fixed Deposits (FD) Explained
A Fixed Deposit is a one-time lump sum invested with a bank or NBFC for a fixed tenure at a fixed interest rate. Interest is typically paid monthly, quarterly, or at maturity, and the principal is safe.
FDs suit investors who have a lump sum available and want guaranteed, predictable returns without market risk.
Recurring Deposits (RD) Explained
A Recurring Deposit lets you save a fixed amount every month for a fixed tenure. The bank compounds interest on your monthly deposits, and you receive the accumulated amount at maturity.
RDs are ideal for salaried individuals who want to build a corpus through disciplined monthly savings — like a forced savings plan with interest.
Interest Rates and Returns
Both FDs and RDs typically offer similar interest rates from the same bank. However, because RD deposits grow monthly, the effective yield on an RD is slightly lower than an FD of the same rate and tenure — the average balance in an RD is about half the final corpus.
For example, a ₹10,00,000 FD at 7% for 5 years grows to about ₹14,10,000. An RD of ₹16,667 per month (same total) at 7% for 5 years grows to about ₹11,90,000.
Which One Should You Pick?
Choose an FD if you have a lump sum and want maximum returns on it. Choose an RD if you want to build a corpus from your monthly income without thinking about it.
Many savers use both: an RD to accumulate a target amount, and an FD to lock in that amount once accumulated. Use our FD calculator and RD calculator to plan your numbers.