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Top Differences Between Fixed Deposits And Recurring Deposits

Updated On Dec 09, 2021

Fixed Deposits and Recurring Deposits are two of the most popular investment options in India, particularly for risk-averse investors. The main benefit of investing in a fixed deposit or recurring deposit plan is that the returns are guaranteed and there are no risks involved. Investors are frequently perplexed as to whether they should invest in an RD or an FD. All major banks and financial institutions offer both the RD and the FD, which are fixed-income products. You can invest a specific amount in either scheme and receive a fixed interest rate on the amount invested. The capital as well as the interest will be returned to investors at the end of the term.

Difference Between Fixed Deposits And Recurring Deposits

Following is the difference between Fixed Deposits and Recurring Deposits

1. Amount To Be Put Up

If a person wants to make a one-time investment, he can do so in a Fixed Deposit offered by any bank or financial institution.

Anyone who can afford to invest a small predetermined amount of money every month in any bank or financial institution can do so in Recurring Deposits.

2. Recurring Subscriptions

You have the option of renewing your fixed deposit by reinvesting the principal amount with or without interest for a new term.

Such an option does not exist. Your savings account receives the lump sum plus interest.

3. Tenure

The length of stay varies from 7 days to 10 years. It is up to the individual to decide on the length of their employment.

The duration varies from six months to ten years. The period of employment must be chosen by the individual.

4. Withdrawal

You can take out a portion of your fixed deposit while the rest earns interest. Partially withdrawing from a recurring deposit is not possible. You can, however, leave either of them early.

5. Access To A Loan

Fixed Deposits can be used to obtain a loan. The loan amount can vary, with a maximum of 90% of the Fixed Deposit's value.

For Recurring Deposits, a loan facility is also available. The maximum amount that can be deposited is up to 90% of the total amount.

6. Rates of Income Tax

With only one exception, the taxability of FD and RD are nearly identical. Both of these investment options earn interest, which is added to your total income and taxed according to your tax bracket. If your tax bracket is 30%, any interest you earn on your FD or RD is taxed at 30%.

7. Clause of Default

A person cannot default on payment because it is done only once at the start with a lump sum payment.

The bank has the right to close such Recurring Deposit accounts if a person fails to pay instalments for six months in a row.


Both FD and RD are safe investment options that guarantee a return on your principal. FDs are best for people who have a large sum of money to invest and want monthly or quarterly cash flow. RDs are best for people who prefer to pay small monthly payments and don't mind waiting for a long time to get their money back.

You may also like to read - Investment Options With High Returns In India

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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