FD vs RD: Fixed Deposit vs Recurring Deposit Comparison
Compare bank Fixed Deposits (FD) against Recurring Deposits (RD) to choose the right conservative savings product for your financial goals.
Quick Comparison Summary
| Feature | Fixed Deposit (FD) | Recurring Deposit (RD) |
|---|---|---|
| Investment Pattern | One-time Lumpsum deposit upfront | Fixed monthly installments |
| Compounding Frequency | Compounded quarterly across most Indian banks | Compounded quarterly on monthly balances |
| Tenure Options | 7 days to 10 years | 6 months to 10 years |
| TDS Taxation (Sec 194A) | TDS deducted if interest > ₹40,000 p.a. (₹50k for seniors) | TDS deducted if interest > ₹40,000 p.a. (₹50k for seniors) |
| Ideal For | Lumpsum windfall cash (bonuses, property sales) | Salaried individuals saving fixed monthly amounts |
Worked Mathematical Example
Comparing ₹1,20,000 total capital invested over 1 Year at 7.00% p.a. interest rate:
- Lumpsum FD (₹1,20,000 upfront): Earns approx ₹8,630 interest at maturity (due to full corpus compounding for 12 months).
- Monthly RD (₹10,000/month for 12 months): Earns approx ₹4,600 interest at maturity (since the first installment compounds for 12 months, second for 11 months, etc.).
Frequently Asked Questions (FAQs)
Which offers higher interest rate: FD or RD?
Most Indian banks offer identical base interest rates for FD and RD of matching tenure. However, FD yields higher absolute returns on total capital because the entire lump sum compounds from Day 1.
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