Recurring Deposit vs Fixed Deposit | Difference Between RD & FD

The RD vs FD is here. The users who don’t know the difference between Recurring Deposit and Fixed Deposit can see the comparison on this page. Know the advantages and benefits of RD and FD. Compare the interest rates of recurring deposit and fixed deposit. To know those details read the article completely.

RD vs FD

RD means Recurring Deposit. It is mainly used for savings purpose. The individuals who want to save their money monthly can use this Recurring Deposit. In this scheme, there is an option for you to select your amount and tenure period.  Choose the amount and tenure period once, and there is no chance to change them. The interest rates are compared to all the saving schemes. There are two types in Recurring Deposit. They are Regular Recurring Deposit and Flexi Recurring Deposit. Before opening a new Recurring Deposit Account, you have to know the complete details of RD and its advantages and Benefits. Therefore, you can select any type from the RD. But you have to pay the money every month correctly. Otherwise, you have to bear a penalty. Therefore, the people who want to know their maturity amount can calculate the amount by using RD Calculator.

 FD means Fixed Deposit. It is a type of a savings account. In Fixed Deposit, there is no need pay the money for every month. Therefore, you have to invest at the time of Fixed Deposit Account Opening. The money which you are spending will increase to a huge amount at the time of the maturity. Many banks are offering high-interest rates for Fixed Deposit. The interest rate depends on the tenure period. The applicants of FD can also apply for loans against on your FD amount. So, you can also calculate your maturity amount which receives at the time of the completion of the tenure period. Therefore, you can use FD Calculator for calculating your Fixed Deposit maturity amount.

RD vs FD

Difference Between RD and FD

Comparision Recurring Deposit Fixed Deposit
Purpose To implant a habit of savings among all the people To save the money safely with a high-interest rate.
Duration Minimum 6 months to maximum 10 years. Minimum 7 days to maximum 10 years.
Eligibility All the Indian residents, Hindu Undivided Families, minors with their guardians are eligible to open a New Recurring Deposit Account. All Indians and HUF( Hindu Undivided  Families can apply for a new Fixed Deposit account.
Investment  Amount You have to select some amount for depositing every month in Recurring Deposit Account. You have to invest some huge amount at the time of opening to take the interest on the money.
Investment Limit The maximum limit for depositing the money in RD is Rs.15 lakhs. In the post office, you can also deposit Rs.10 The maximum limit for depositing the money in FD is Rs.1.5 lakhs. In some banks, Rs.500 is a minimum deposit.
Formula used to calculate Maturity Amount M = R[ (1+i)n-1] / 1-(1+i) -1/3. 


M = Maturity amount.

R = Monthly installment.

i = rate of interest divided by 400/600/1200/100

A = P(1+r/n)nt


A = Final Amount that will be received.

r = Annual nominal interest rate as a decimal that is if the interest paid for 5.5%. Then it will be 0.055.

P = Principal Amount of Initial Investment.

n = Number of times the interest is compounded per year.

Interest calculations Recurring Deposit Compound interest occurs in every quarter. The interest rate works on a compound basis. Every year, the compound interest calculated according to the interest rates.

Comparision Renewal & Withdrawal of RD and FD

Recurring Deposit Fixed Deposit

The users should not withdrawal the maturity amount without the completion of the tenure period.

The users can take the interest amount every month.
Partial withdrawals are not allowed in Recurring Deposits. The FD Account holders withdrawal  Rs.20,000 in cash.
For premature withdrawal, you have to bear a penalty. In a case of tax saving deposit, withdrawals are not allowed for minimum 5 years.
 Premature withdrawals are possible, but the interest rate of your Recurring Deposit Account is less than 8.40%. Premature withdrawals depend on up on the banks and penalties
 RD Holders have to take the maturity amount after the completion of the tenure period. FD Holders can collect the total amount at the time of the maturity with interest

RD vs FD Nominations

Recurring Deposit Fixed Deposit
After the death of the RD Account holders, the nominee of that account can take the Recurring Deposit Maturity amount A nominee can take the Fixed Deposit maturity amount after the death of the account holder.
Only one nominee is eligible for one RD Account. Fixed Deposit account accepts only one nominee
The banks require the nominee details like Name, address, age, relationship with the account holders and the Guardian details if any. The banks require the nominee details like name, relationship with the account holder, age, address and details of the guardians if any.
The Recurring Deposit  Account holders death certificate is necessary to claim the RD maturity amount. The Fixed Deposit Account holders death certificate is needed to collect the fixed deposit maturity amount.

RD vs FD loans and Income Tax

Loans are available for Recurring Deposits. Loans are available for Fixed Deposits.
The users can take the loans without breaking the maturity amount. Loan is issued for those who are need of funds. They can take the money without breaking the FD Maturity amount.
You can get 90% loan from your RD Maturity amount. You can get 70% to 90% loans from your Fixed Deposit maturity amount.
The Recurring Deposits Income tax depends upon the depositor’s tax slab As per the depositor’s tax slab, the income tax of Fixed deposit is calculated.
No TDS are applicable, but the account holder needs to include the interest rate according to the tenure. The interest rate of Fixed Deposit is calculated by annual or cumulative.

RD vs FD – Which is Better?

In fixed deposit, you can earn the interest in a compounding manner from the initial lump sum amount. In Recurring Deposit, you have to deposit some amount of money in your RD Account for every month till the completion of the tenure period. Therefore, you can select the best one from them which is comfortable for you. It all depends upon your decision. Therefore, the difference between the Recurring Deposit and Fixed Deposit is given in the above tabular columns. So, the users have to check the differences carefully to choose the best one from them.

Both the Recurring Deposit and Fixed Deposit have many benefits and advantages. Comparing with the other depositors, the senior citizens have more advantages and benefits. The interest rates are also high for the senior citizens. For the sake of people, we had given an example in the below sections. Therefore, the users can clearly understand the difference between the recurring deposit and fixed deposit from the example. So, read the below table carefully.

Example: RD vs FD / FD vs RD
Differences Recurring Deposit Fixed Deposit
Invested Amount Rs.2000 per 12 months Rs.24,000
Interest per amnnum 9% for Quarterly Compound 9% (Quarterly Compound)
Annual Interest Rs.1195 Rs.2234
Total Amount at the time of maturity Rs.25,195 Rs.26,234
Updated: March 18, 2017 — 9:20 am

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