FD Vs RD: Which is the Better Investment Scheme?

When it comes to securing your financial future, Fixed Deposits (FD) and Recurring Deposits (RD) are two popular choices. Both offer stability and assured returns, but they differ in their structure and benefits. This article will delve into the comparison to determine which option suits your financial goals best.

Read more
Maximum returns Offered by Guaranteed

6.5%**

Fixed Deposits

(by SBI bank)

(5-10 Years)

7.1%***

Public Provident Fund

(other popular options)

(15 Years)
We are rated++
rating
10.5 Crore
Registered Consumer
51
Insurance Partners
5.3 Crore
Policies Sold
In-built life cover
Get Guaranteed returns upto 7.1%* With Life Cover
+91
Secure
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on ''View Plans'' you, agreed to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp
We are rated++
rating
10.5 Crore
Registered Consumer
51
Insurance Partners
5.3 Crore
Policies Sold

What is a Fixed Deposit?

A Fixed Deposit (FD) is a type of investment option offered by banks and financial institutions. In an FD, you deposit a certain amount of money with the bank for a fixed period, ranging from a few months to several years. 

During this period, the bank pays you a fixed FD interest rate on your deposit, which is usually higher than the interest offered on a regular savings account. The interest rate remains constant throughout the tenure of the FD, hence the term "fixed" deposit. 

At the end of the maturity period, you receive your initial deposit along with the accumulated interest. FDs are considered low-risk investment options and are popular among investors who seek stable returns over a predetermined period.

Information About
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.1% (TAX-FREE)
Returns After Tax
7.1%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
VIEW PLANS
*For annual premium upto ₹5 Lacs

What is a Recurring Deposit?

A Recurring Deposit (RD) is a type of investment scheme offered by banks where you can regularly deposit a fixed amount of money at specified intervals, typically monthly, for a predetermined period. 

The main feature of an RD is that you contribute a fixed sum regularly, and at the end of the maturity period, you receive your initial deposits along with the accumulated interest.

The RD interest rates are generally similar to those for Fixed Deposits (FDs), and they vary depending on the bank and the tenure of the RD. 

FD Vs RD: Which is Better?

The following table compares Fixed Deposit and Recurring Deposit (FD and RD) across various criteria to help you determine which option may be better suited for different financial goals:

Criteria Fixed Deposit (FD) Recurring Deposit (RD)
Initial Investment Lump sum amount Regular monthly investment
Tenure 7 days to 10 years 6 months to 10 years
Interest Rate 6% - 9% p.a. 3% - 8% p.a.
Maturity Period Fixed term Fixed term, usually shorter than FD
Flexibility Less flexible, locked until maturity More flexible, allows monthly contributions
Interest Payment Paid at maturity Compounded or paid periodically during the term
Penalty for Early Withdrawal Typically incurs a penalty for premature withdrawal Usually, there is no penalty, but it may affect interest earnings
Risk Generally low risk Generally low risk
Purpose Suitable for those with lump sum savings Suitable for those with regular income
Returns Generally, higher returns due to higher interest rates Lower returns due to lower interest rates

fd return beater

You May like to Read: SBI Fixed Deposit Vs Post Office Term Deposit Schemes

FD or RD: What Should You Choose?

Choosing between a Fixed Deposit (FD) and a Recurring Deposit (RD) depends on your savings goals and financial situation. Let us have a look at the features:

Fixed Deposit (FD) Recurring Deposit (RD)
  • Ideal for: People with a lump sum amount to invest.
  • Benefits:
    • Potentially higher interest rates compared to RD.
    • Option for cumulative FDs where interest is compounded for better returns.
    • Some banks offer a loan facility against FD.
  • Drawbacks:
    • Requires a lump sum investment upfront.
    • Less flexible - early withdrawal may incur penalties.
  • Ideal for: People who can save regularly and do not have a lump sum.
  • Benefits:
  • Inculcates a savings habit through regular deposits.
  • No penalty for missed instalments (though it reduces the maturity amount).
  • Interest rates are comparable to FDs for some tenures.
  • No TDS (Tax Deducted at Source) on interest income (up to a limit).
  • Drawbacks:
  • Generally lower interest rates than FDs.
  • Lower total amount accumulated compared to FD for the same tenure (due to gradual deposits).

Summarising:

  • Go for FD if you have a lump sum and prioritize returns, even if it means less flexibility.

  • Choose RD if you prefer building savings habits through regular deposits and do not need immediate access to the money.

FD interest rates India have fallen consistently over the last 12 years.
Invest in Plans that offer Guaranteed Returns for over 25 Years

In Conclusion

The decision between FD (Fixed Deposit) and RD (Recurring Deposit) depends on your needs. FD offers a lump sum deposit with fixed interest rates for a specific period, which is suitable for those with a lump sum amount. RD involves regular monthly deposits with interest, which is ideal for those who can save small amounts constantly. Consider your financial goals and ability to save regularly when deciding between FD and RD.

Bank FD Interest Rates

Bank FD Calculator

NRI-NRE FD Rates

Allahabad Bank FD Rates

Allahabad Bank FD Rates
Andhara Bank FD Rates

Andhara Bank FD Rates
Assam Gramin Vikash Bank FD Rates

Assam Gramin Vikash Bank FD Rates
AU Small Finance Bank FD Rates

AU Small Finance Bank FD Rates
Axis Bank FD Rates

Axis Bank FD Rates
Bajaj Finance FD Rates

Bajaj Finance FD Rates
Bandhan Bank FD Rates

Bandhan Bank FD Rates
Bangiya Gramin Vikash Bank FD Rates

Bangiya Gramin Vikash Bank FD Rates
Bank of Baroda FD Rates

Bank of Baroda FD Rates
Bank of Ceylon FD Rates

Bank of Ceylon FD Rates
Bank of Maharashtra FD Rates

Bank of Maharashtra FD Rates
Baroda Gujarat Gramin Bank FD Interest Rates

Baroda Gujarat Gramin Bank FD Interest Rates
BOI FD Interest Rates

BOI FD Interest Rates
Canara Bank FD Rates

Canara Bank FD Rates
Capital Small Finance Bank FD Rates

Capital Small Finance Bank FD Rates
Central Bank of India FD Rates

Central Bank of India FD Rates
Citi Bank FD Rates

Citi Bank FD Rates
City Union Bank FD Rates

City Union Bank FD Rates
Corporation Bank FD Rates

Corporation Bank FD Rates
Dakshin Bihar Gramin Bank FD Rates

Dakshin Bihar Gramin Bank FD Rates
DBS Bank FD Rates

DBS Bank FD Rates
Dena Bank FD Rates

Dena Bank FD Rates
Dhanlaxmi Bank FD Rates

Dhanlaxmi Bank FD Rates
Equitas Bank FD Rates

Equitas Bank FD Rates
ESAF Small Finance Bank FD Rates

ESAF Small Finance Bank FD Rates
HDFC FD Interest Rates

HDFC FD Interest Rates
HSBC FD Rates

HSBC FD Rates
ICICI Bank FD Rates

ICICI Bank FD Rates
IDBI Bank FD Rates

IDBI Bank FD Rates
IDFC Bank FD Rates

IDFC Bank FD Rates
Indian Bank FD Rates

Indian Bank FD Rates
Indian Overseas Bank FD Rates

Indian Overseas Bank FD Rates
IndusInd Bank FD Rates

IndusInd Bank FD Rates
Jana Small Finance Bank FD Rates

Jana Small Finance Bank FD Rates
Karnataka Bank FD Rates

Karnataka Bank FD Rates
Kerala Bank FD Interest Rates

Kerala Bank FD Interest Rates
Kotak FD Rates

Kotak FD Rates
Lakshmi Vilas Bank FD Rates

Lakshmi Vilas Bank FD Rates
Muthoot Capital FD Rates

Muthoot Capital FD Rates
Nainital Bank FD Rates

Nainital Bank FD Rates
Odisha Gramya Bank FD Rates

Odisha Gramya Bank FD Rates
Paschim Banga Bank FD Rates

Paschim Banga Bank FD Rates
Paytm FD Rates

Paytm FD Rates
PNB FD Interest Rates

PNB FD Interest Rates
Prathama UP Gramin Bank FD Rates

Prathama UP Gramin Bank FD Rates
RBL Bank FD Rates

RBL Bank FD Rates
Saurashtra Gramin Bank FD Interest Rates

Saurashtra Gramin Bank FD Interest Rates
SBI FD Interest Rates

SBI FD Interest Rates
Shriram Finance FD Rates

Shriram Finance FD Rates
State Bank of Hyderabad FD Rates

State Bank of Hyderabad FD Rates
State Bank of Mysore FD Rates

State Bank of Mysore FD Rates
State Bank of Travancore FD Rates

State Bank of Travancore FD Rates
Syndicate Bank FD Rates

Syndicate Bank FD Rates
Tamil Nadu Grama Bank FD Interest Rates

Tamil Nadu Grama Bank FD Interest Rates
Telangana Grameena Bank FD Rates

Telangana Grameena Bank FD Rates
Tripura Gramin Bank FD Interest Rates

Tripura Gramin Bank FD Interest Rates
UCO Bank FD Rates

UCO Bank FD Rates
ujjivan small finance bank fd rates

ujjivan small finance bank fd rates
Union Bank FD Rates

Union Bank FD Rates
Uttar Bihar Gramin Bank FD Rates

Uttar Bihar Gramin Bank FD Rates
Uttarakhand Gramin Bank FD Interest Rates

Uttarakhand Gramin Bank FD Interest Rates
Vijaya Bank FD Rates

Vijaya Bank FD Rates
Yes Bank FD Rates

Yes Bank FD Rates

Expand
Allahabad Bank FD Calculator

Allahabad Bank FD Calculator
Andhra Bank FD Calculator

Andhra Bank FD Calculator
AU Bank FD Calculator

AU Bank FD Calculator
Axis Bank FD Calculator

Axis Bank FD Calculator
Bajaj Finance FD Calculator

Bajaj Finance FD Calculator
Bandhan Bank FD Calculator

Bandhan Bank FD Calculator
Bank of Baroda FD Calculator

Bank of Baroda FD Calculator
Bank of India FD Calculator

Bank of India FD Calculator
Bank of Maharashtra FD Calculator

Bank of Maharashtra FD Calculator
Canara Bank FD Calculator

Canara Bank FD Calculator
Central Bank FD Calculator

Central Bank FD Calculator
Corporation Bank FD Calculator

Corporation Bank FD Calculator
Equitas Small Finance Bank FD Calculator

Equitas Small Finance Bank FD Calculator
HDFC Bank FD Calculator

HDFC Bank FD Calculator
ICICI Bank FD Calculator

ICICI Bank FD Calculator
IDBI Bank FD Calculator

IDBI Bank FD Calculator
IDFC Bank FD Calculator

IDFC Bank FD Calculator
Indian Bank FD Calculator

Indian Bank FD Calculator
Indian Overseas Bank FD Calculator

Indian Overseas Bank FD Calculator
IndusInd Bank FD Calculator

IndusInd Bank FD Calculator
Karnataka Bank FD Calculator

Karnataka Bank FD Calculator
Karur Vysya Bank FD Calculator

Karur Vysya Bank FD Calculator
Kotak Bank FD Calculator

Kotak Bank FD Calculator
Mahindra Finance FD Calculator

Mahindra Finance FD Calculator
OBC Bank FD Calculator

OBC Bank FD Calculator
Odisha Gramya Bank FD Calculator

Odisha Gramya Bank FD Calculator
PNB Bank FD Calculator

PNB Bank FD Calculator
SBI FD Calculator

SBI FD Calculator
Shriram Finance FD Calculator

Shriram Finance FD Calculator
Syndicate Bank FD Calculator

Syndicate Bank FD Calculator
Tripura Gramin Bank FD Calculator

Tripura Gramin Bank FD Calculator
UCO Bank FD Calculator

UCO Bank FD Calculator
Union Bank FD Calculator

Union Bank FD Calculator
Yes Bank FD Calculator

Yes Bank FD Calculator

Expand
HDFC NRE FD Rates

HDFC NRE FD Rates
Maybank Malaysia FD Rates

Maybank Malaysia FD Rates
SBI NRI FD Rates

SBI NRI FD Rates
Axis NRI FD Rates

Axis NRI FD Rates
Maybank Singapore FD Rates

Maybank Singapore FD Rates
Yes Bank NRI FD Rates

Yes Bank NRI FD Rates

FAQs

  • Which is better, FD or RD or SIP?

    When considering the options of Fixed Deposit (FD), Recurring Deposit (RD), and Systematic Investment Plan (SIP), it's important to recognize their distinct purposes and risk profiles:

    • Fixed Deposit (FD): Ideal for individuals looking to invest a lump sum for a predetermined period. FDs offer assured returns with minimal risk but limited flexibility.

    • Recurring Deposit (RD): Suited for those aiming to cultivate a savings habit by making regular contributions. RDs yield returns comparable to FDs, with low risk and somewhat less flexibility.

    • Systematic Investment Plan (SIP): Recommended for individuals interested in long-term wealth accumulation. SIPs involve investing in mutual funds, potentially yielding higher returns in relation to market-related risks. SIPs also afford greater flexibility compared to FDs and RDs.

  • Which is better, FD or RD, in ICICI Bank?

    For ICICI Bank specifically, both FDs and RDs offer similar interest rates. So, the choice depends on your needs:

    • Choose FD if you have a lump sum and a fixed investment horizon.

    • Choose RD if you want to save regularly through instalments.

  • Is it worth investing in RD?

    RDs are a good investment plan in the following cases: 

    • You seek a safe, low-risk investment with guaranteed returns.

    • You want to inculcate a regular savings habit.

    • You need to build a corpus for a short-term goal.

    However, RDs might not be ideal for:

    • High returns: Interest rates on RDs are generally lower than other investment options.

    • Long-term wealth creation: RD returns may not outpace inflation over long periods.

  • Why is FD better than RD?

    Fixed Deposits (FDs) and Recurring Deposits (RDs) both have their pros and cons. The better choice depends on your financial need. Following are the reasons why people choose FDs over RDs:

    • Higher interest rates: For some tenures, FDs might offer slightly higher interest rates than RDs.

    • Lump sum investment: FDs are suitable for investing a lump sum amount at once.

    • Early withdrawal: Some FDs offer better interest payouts than RDs for premature withdrawals.

    However, FDs typically lock your money for a fixed tenure, reducing liquidity compared to RDs.


˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
* Applicable for Titanium variant of Max Life Smart Fixed-return Digital (Premium payment of 5 years, Policy term of 10 years) and a healthy male of 18 years old paying Rs. 30,000/- monthly (exclusive of all applicable taxes)
** Fixed deposit rate applicable for 5 year's 1 day to 10 years for investment amount less< 2 Crore ( Not for senior citizens).
*** PPF interest rate applicable for 15 years for investment amount upto 1.5 Lac
+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
#Discount offered by insurance company
## The Guaranteed Returns are dependent on the policy term and premium term availed along with the other variable factors. 7.1% rate of return is for an 18 years old, healthy male for a policy term of 20 years and premium term of 10 years with Rs.10,000 monthly installment premium. All plans listed here are of insurance companies’ funds.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
highest guaranteed return
Calculators
Fixed Deposit Calculator

FD Rates articles

Recent Articles
Popular Articles
Central Bank of India FD Premature Withdrawal
Central Bank of India FD Premature Withdrawal

16 Jul 2025

Central Bank of India FD premature withdrawal is subject to a
Read more
IndusInd Bank FD Premature Withdrawal
IndusInd Bank FD Premature Withdrawal

16 Jul 2025

IndusInd Bank FD premature withdrawal is provided in case of
Read more
IDBI Bank FD Premature Withdrawal
IDBI Bank FD Premature Withdrawal

16 Jul 2025

IDBI Bank FD Premature Withdrawal is allowed during emergencies
Read more
IDFC FIRST Bank FD Premature Withdrawal
IDFC FIRST Bank FD Premature Withdrawal

16 Jul 2025

IDFC FIRST Bank FD premature withdrawal typically charges a 1%
Read more
Federal Bank FD Premature Withdrawal
Federal Bank FD Premature Withdrawal

16 Jul 2025

Federal Bank FD premature withdrawal, if done after 15 days, may
Read more
Best Savings Bank Accounts in India in 2025
Best Savings Bank Accounts in India in 2025
  • 07 May 2025
  • 5597
Choosing the right savings bank account is important for managing your finances efficiently. In 2025, several
Read more
SBI Fixed Deposit Monthly Income Scheme
SBI Fixed Deposit Monthly Income Scheme
  • 04 Apr 2022
  • 46332
The SBI Fixed Deposit Monthly Income Scheme, commonly called the SBI Annuity Deposit Scheme, is a specialised
Read more
Application for Withdrawal of Fixed Deposit
Application for Withdrawal of Fixed Deposit
  • 03 Dec 2021
  • 78721
An Application for Withdrawal of Fixed Deposit is a formal request to withdraw the Fixed Deposit (FD) amount from
Read more
SBI Credit Card on FD - Eligibility and Benefits
SBI Credit Card on FD - Eligibility and Benefits
  • 20 May 2025
  • 7139
Using an SBI credit card against an FD is an intelligent and safe way of enjoying credit-card benefits for
Read more
SBI Fixed Deposit Double Scheme
SBI Fixed Deposit Double Scheme
  • 18 Feb 2022
  • 29887
The SBI Fixed Deposit Double Scheme is primarily an investment scheme offered by the State Bank of India that
Read more

Explore the popular searches and stay informed

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL