FD vs RD: What Is the Difference?
Both are bank deposits that pay a fixed interest rate. The difference is how you put the money in.
The basic difference
- FD (fixed deposit): you deposit one amount at the start and keep it for a fixed period.
- RD (recurring deposit): you deposit a fixed amount every month for a fixed period.
Worked examples
With quarterly compounding, an FD of ₹1,00,000 for 5 years at 7% a year matures at about ₹1.41 lakh. An RD of ₹5,000 a month for 3 years at 6.5% a year gives about ₹1.99 lakh on ₹1.8 lakh deposited. Try your own numbers in the FD Calculator and RD Calculator.
| FD | RD | |
|---|---|---|
| How you pay | One amount at the start | Fixed amount every month |
| Best when | You already have a lump sum | You save from monthly income |
| Interest earned on | The full amount for the whole period | Each deposit, for the months it stays |
How to choose
- If you have a lump sum now, an FD puts all of it to work from day one.
- If you save a fixed amount each month, an RD builds the habit.
- Compare rates across banks and check the rules for early withdrawal.
Interest on both is generally taxable and TDS may apply. This is general information, not financial advice. Market-linked options such as SIPs work differently and are not guaranteed, see the SIP Calculator.
Note: Results are estimates for learning and planning. They are not financial, tax or investment advice, and actual figures from your bank or lender may differ. See our disclaimer.
Frequently asked questions
Which gives a higher return, FD or RD?
The rates are usually similar. The final amount differs mainly because of how and when your money goes in.
Can I break an FD or RD early?
Usually yes, but banks may charge a penalty or pay a lower rate. Check your bank's terms.
Are FD and RD safe?
They are bank deposits with a fixed rate. Deposit insurance limits apply, so check the rules for your bank.