FD vs RD: Which is Better?

Fixed Deposit

An FD is an instrument provided by banks & financial institutions where you can deposit a lump sum for a predetermined period at a predetermined rate. 

RDs involve regular, fixed deposits into a financial institution over a pre-defined period for a fixed-interest investment that matures in 6 months to 10 years. 

Recurring Deposit


The tenure of FD ranges from 7 days to years, whereas for RD, it is 6 months to years.

Interest Rate

The FD interest rate is 4-8%, and the RD interest rate ranges from 5.45-7.25%.

RD and FD have very little to no risk. Both are insured up to Rs. 5 lakhs by the DICGC.



The liquidity in both FDs & RDs is available with applicable penalties

The interest from both RD & FD is fully taxable if the amount exceeds Rs 40,000 per year. 

Tax Benefits

Deposit Limits

You can deposit from Rs. 100 to any amount in FD and from Rs 10 to any amount in RD.

FD vs RD: What Should You Pick?

For preserving and growing a lump sum, opt for an FD. RD in contrast, is a gradual investment scheme, allowing incremental investments for substantial  long-term accumulation.