FD vs RD: Know The Difference Between Fixed Deposit And Recurring Deposit

FD vs RD: Know The Difference Between Fixed Deposit And Recurring Deposit

Quite often investors wonder what is the difference between a fixed deposit account and a recurring deposit account. In terms of product features, they are both assured return schemes with a certain tenure, except that Recurring Deposit is more of a regular payment investment. Like you can open a fixed deposit online, you can also open a recurring deposit account online. Barring the periodic investments, all other features are broadly the same.  

As much as they appear similar, there are also a number of subtle differences. For instance, one key difference between fixed deposit and recurring deposit is the nature of investors who opt for either of these products. People with lump sums available normally opt for FD, while RDs are for investors looking at phased investment. Here is a quick look at the difference between RD and FD.

What are fixed deposits and recurring deposits?

Fixed deposit (FD) is a lump sum investment in a bank or NBFC FD. You can also open an FD account in a post office. On the other hand, the Recurring deposit is meant for those who do not have a lump sum but intend to invest in a bank deposit on a regular or recurring basis. Both the FD and the RD earn higher returns compared to pure savings accounts and to that extent they do add value to the customers.  

Both the fixed deposit and the recurring deposit are ideal investment instruments suited to investors who desire stable returns. As we shall see later, high interest rates and a tax-saving option under Section 80C are some of the benefits of FD. However, for investors looking to commit funds on a sustained basis, the recurring deposit is a better option.

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Table of Content

  1. What are fixed deposits and recurring deposits?
  2. What is a Fixed Deposit?
  3. What is a Recurring Deposit?
  4. Differences between fixed deposit (FD) and recurring deposit (RD)
  5. Difference between fixed deposit and recurring deposit 
  6. Conclusion

What is a Fixed Deposit?

fixed deposit is essentially a type of investment plan where you make a one-time, lump sum commitment with a bank or other financial institution for a predetermined duration of time. You get interest at a specific percentage as a reward for depositing this big cash. The financial institution refunds your main investment amount and interest that has collected up to that point after the designated amount of time has passed.

Unlike other types of investments, a fixed deposit often comes with guaranteed returns. This basically implies that the interest you get on your deposit will not be influenced by the stock market or any other factors. Simply expressed, you always receive the quoted interest on the fixed deposit. You may always use an online FD interest calculator to estimate the exact returns you're expected to receive from an FD. 

Additionally, compared to other investment options, fixed deposits are typically thought to be much safer. On fixed deposits, the risk of default is rather minimal. Despite this, there is still a danger of default. If you invest in low-rated fixed deposits, you might still end up losing your initial investment. 

What is a Recurring Deposit?

RDs, or recurring deposits, are a unique category of term deposit offered by Indian banks. Consumers may invest using this system, which enables them to make regular installments and earn decent returns. Due to the monthly deposit aspect and an interest component, it frequently offers users and individuals freedom and convenience of investing.

But it's important to understand that RDs are distinct from Fixed Deposits/FDs. RDs are generally adaptable. The owner of an RD account has the option to invest a certain sum each month while receiving respectable income. RDs make a great combination investment and saving tool.

Most of the major banks in the nation provide recurring deposit accounts, which normally have periods between six months and 10 years. This flexibility allows consumers to choose the term that best meets their needs.  The interest rate, once set, does not fluctuate throughout the period, and upon maturity, the person will get a lump sum payment that covers both the regular investments and the interest gained.

Differences between fixed deposit (FD) and recurring deposit (RD)

Here are some of the key differences between an FD and RD.  

1) The first difference is with respect to the frequency of the deposit. For instance the FD is a one time deposit while the RD is a regular deposit. In an RD you commit to invest in the bank or PO deposit on a regular basis, which can be monthly, quarterly, semi-annually or even annually.

2) The tenure of the FD is more flexible and wider. For instance, the FD tenure ranges from 7 days to as long as 10 years. In the case of an RD, the tenure has to be for a minimum of 6 months and can be for a maximum of up to 10 years.

3) In the case of FDs, the minimum investing is normally around Rs1,000, although most banks insist on minimum ticket sizes of at least Rs10,000 to cover their cost. Smaller deposits have to be mandatorily online only. On the other hand, the Recurring Deposit can be for an amount as low as Rs100, although post offices also accept less than that.

4) The tax benefit for 5 year FDs and beyond is only applicable to FDs. Since RDs are like a regular investment, it is hard to determine the principal invested. Hence Section 80C is not applicable to RDs, even if the intent is to continue for a tenure of more than 5 years.

5) Fixed deposits are ideally suited to those having cash available with them. Then it makes sense to opt for an FD as rates are better in that case. However, for individuals looking to start off with small amounts of money, the RD is a much better product.

6) Last but not the least, there is also a difference in the nature of the pay-out done by these two instruments. FDs can pay interest at regular intervals or at maturity. However, the RDs don’t pay interest at regular intervals and it is only paid at maturity.  

One question people ask is whether RD can be converted into FD. That is not technically possible. However, once the RD matures and you get a lumpsum maturity benefit, the same can be invested in an FD.

Difference between fixed deposit and recurring deposit 


Fixed Deposit

Recurring Deposit


Investor: both individual and institutional investors, including minors. The minimum age is ten.

Investor: both individual and institutional investors, including minors. The minimum age is ten.


Seven days to ten years

Six months to ten years

Sum to be deposited

Differs from bank to bank, 

Particularly Rs 500


  • Continuous Fixed Deposit
  • Bank deposits for non-cumulative fixed deposits
  • Business deposits
  • FD senior citizen
  • FD NRIs
  • Normal FDs
  • Regular FDs
  • Tax-saving FDs


  • Regularly scheduled recurring deposits
  • NRI recurring deposit account
  • Minors' recurring deposit account
  • Accounts with recurring deposits for seniors


Savings on Income Taxes

With a 5-year lock-in term, it is accessible

Not accessible


Fixed deposits and recurring deposits differ significantly in a number of ways, including the amount of money that may be placed, the length of the deposit, and the frequency of deposits. While recurrent deposits enable people to make regular payments over a certain length of time, fixed deposits allow them to lock in a given sum of money for a predetermined amount of time. 

Both types of accounts have a role to play in promoting saving behaviours, but the optimum option will depend on a person's financial objectives, requirements, and the services and interest rates provided by various institutions. Before choosing which sort of account to utilise, it is crucial to thoroughly compare these variables. In addition, if you wish to trade stocks, visit the blinkX website. They provide a straightforward blinkX trading app that will help you analyse and predict how currency changes will affect various types of assets. 

A fixed deposit can normally be opened by anybody with an active bank account online or in person at a bank location.

Yes, through the mobile banking application or internet banking service made available by many banks, it is possible to start a recurring deposit account online.

Fixed deposit and recurring deposit interest rates can differ greatly between banks. It is crucial to evaluate the interest rates provided by several banks in order to determine which one provides the highest return on your investment.