Understanding The Difference Between Fixed Deposit and Recurring Deposit

With recurring deposits, the customers have the flexibility to invest a sum of their choice every month and save as per their convenience. This is the primary difference between FD and RD.

Many banks offer recurring deposits with a tenure that ranges from 6 months to 10 years. The interest rates remain fixed over the tenure. And just like Fixed Deposit, the principal is received on maturity, and you can choose to receive the interest at regular intervals or at the time of maturity.

Fixed Deposit and Recurring Deposit are two of the most popular financial instruments among risk-averse investors. The most significant advantage of investing in one of these schemes is that the returns are fixed. Since both schemes are quite similar, many people get confused between FD v/s RD and struggle while deciding if they should invest in a Fixed Deposit or a Recurring Deposit.

In this article, let us know everything about these investment options, including FD v/s RD and which one should you choose.

'To understand FD/RD, i.e., the difference between FD and RD it’s imperative to understand both these investment instruments.

Fixed Deposit is an investment option that allows you to grow your money over a period at a fixed interest rate. Under this scheme, you have to make a one-time investment at the start of the tenure. This tenure for a fixed deposit can be anywhere between 7 days and 10 years. The principal amount is received on maturity; however you can choose to receive the interest on FD either at regular intervals or at the time of maturity.

Under a fixed deposit, you can park your savings and enjoy considerable wealth growth over time. As FD interest rates remain constant, Fixed deposit is safe, , and offers guaranteed returns after a period of time.

Choosing between whether you should invest in a Fixed Deposit (FD) or a Recurring Deposit (RD) can be tough. Unless you have a clear understanding of the differences between FD vs RD. The below table will help you understand the key differences between FD and RD better so that you can make an informed investment decision:

In this article, let us know everything about these investment options, including FD v/s RD and which one should you choose.

Here, we have given you a detailed guide on FD v/s RD, the difference between the two types of term deposits.

In the previous section, you learned about the difference between FD and RD . Now we are going to discuss some common features which FD and RD share.

At this point, you might be wondering whether you should invest in a fixed deposit or a recurring deposit. Here's how you can make a decision.

If you have a considerable sum of money that can be invested as a lump sum, then fixed deposits can be ideal for you. You can earn more as FD interest rates are usually higher than RD interest rates. You can invest in the cumulative FD, where the interest is compounded.

On the other hand, if you have sizeable excess income such as Rs. 1000 that you can invest each month, recurring deposits are ideal for you. You can keep depositing a small fixed sum each month. The returns will be credited to your account on maturity.