Cash lying idle in your bank account?
Invest as low as Rs. 1,000 in Mutual Funds and enjoy higher returns.
  • Fixed Deposit BYTES FROM OUR KITCHEN

    Difference between Fixed Deposit and Recurring Deposit

    There is a whole world of investment options out there, with many ways to increase your savings. Fixed deposits and Recurring deposits are among the best ways to mobilize your idle savings and have them work for you.

    Let's take a look at the points with the table below which explains FD vs RD:

    Fixed Deposits Recurring Deposits
    Purpose: To enable investors to mobilize idle savings and earn with a higher rate of interest than regular savings bank accounts. Purpose: To inculcate a regular habit of savings among the public.
    Duration: Fixed deposit accounts can be opened for a minimum of 7 days, to a maximum of 10 years. Duration: Recurring Deposit accounts can be opened for a minimum of 6 months, and a maximum of 10 years.
    Eligibility: All resident Indians and Hindu Undivided Families (HUFs) are eligible to open a fixed deposit account. Eligibility: All resident Indians and Hindu Undivided Families (HUFs) are eligible to open this account. RD accounts can also be opened for minors by their parents or legal guardians.
    Compound Interest and Impact of Compounding Frequency: Interest on investments made in a FD compounds, and earns interest on the new balance after each compounding. The following formula explains this further: Where:
    A = Final Amount that will be received P = Principal Amount. r = Annual nominal interest rate. n = number of times the interest is compounded per year. t = number of years
    Compound Interest and Impact of Compounding Frequency: Most banks that offer Recurring Deposit usually compound interest on a quarterly basis. Compound interest is interest that is added to the principal amount so that from then on, the interest that has been added also earns interest. This addition of interest to the principal is called compounding. The following formula gives you the total amount one will get if compounding is done: Where: M = Maturity value. R = Monthly instalment. n = Number of quarters. i = Rate of interest/400.
    Renewals and withdrawals of Fixed Deposit Accounts:
    • Rolling over of deposits for another term where term, in which the tenure can differ.
    • Auto-renewal: The tenure of deposit doesn't change, but the interest rate depends on the prevailing interest rate at the time of renewal.
    • Deposits can be encashed at maturity.
    • Premature withdrawals are subject to penalties.
    • Amounts being withdrawn above Rs.20,000 must be transferred to the depositors savings bank account.
    • Amounts being withdrawn below Rs.20,000 can be taken in cash.
    • For sweep-in facility and flexi-deposits, withdrawals are allowed on the interest accrued by the FD, the balance will then be held as a new deposit.
    • No withdrawals are allowed for a minimum of 5 years in the case of tax-saving deposits.
    Renewals and withdrawals of Recurring Deposit Accounts:
    • During the premature closure of the RD for reinvestment in a term deposit, interest will be paid to the account holder without reducing interest rate by 1% (as penalty).
    • If the account holder does not stay with the bank after prematurely closing the account, the interest rate will be (whatever the interest rate was, minus 1% as penalty).
    • Partial withdrawals are not allowed for RDs, but some banks offer a loan facility against the RD, where the RD must be pledged as collateral.
    • Premature withdrawals are possible, but the rate of interest will be less than the base rate (which is around 8.40%).
    Nominations under Fixed Deposit Schemes:
    • A nominee is the person named to receive the funds accrued in a particular FD upon the depositor's death.
    • Nominee details required: Name, age, address, relationship with depositor, details of legal guardians.
    • Only one nominee per deposit account.
    • Proof of depositor's death required to claim funds.
    Nominations under Recurring Deposit Schemes:
    • A nominee is the person named to receive the funds accrued in a particular RD upon the depositor's death.
    • Nominee details required: Name, age, address, relationship with depositor, details of legal guardians.
    • Only one nominee per deposit account.
    • Proof of depositor's death required to claim funds.
    Loan against Fixed Deposit
    • Loans can be availed by keeping your FD as collateral.
    • Loans are given as an alternative to those who need funds, but do not wish to break the deposit account prematurely.
    • Most banks allow for loans in the range of 70% - 90% of the deposit value.
    Loan against Recurring Deposit
    • Loans can be availed by keeping your RD as collateral.
    • Loans are given as an alternative to those who need funds, but do not wish to break the deposit account prematurely.
    • Banks offer loans for up to 90% of the deposit value.
    Income Tax on FD
    • Income on FDs is taxed as per the depositors tax slab.
    • Interest on FDs is calculated on an annual or cumulative basis, but it's taxed on an accrual basis - revenue is recognised when earned and expenses are recognised when incurred.
    Income Tax on RD
    • Income on RDs is taxed as per the depositors tax slab.
    • No TDS, but the investor needs to include the interest accrued during the year in the IT return.

    So which one should you invest in? A fixed deposit or a recurring deposit?

    It all depends on your needs. A fixed deposit account earns interest in a compounding manner on the initial lump sum deposited. The entire amount earns money for 1 year, but in the case of recurring deposits, the first instalment earns interest for 12 months, the second for 11 months, the third for 10 months, and so on until the end of the deposit term.

    In real time, you make more money with a fixed deposit (As illustrated by the below example), but it does not have the flexibility of a recurring deposit account in terms of being able to deposit smaller amounts as and when they become available to you.

    Example:

    Particulars Fixed Deposit Account Recurring Deposit Account
    Amount invested Rs.24,000 (lumpsum) Rs.2,000 (per month for 12 months)
    Interest rate per annum 9% (compounded quarterly) 9% (compounded quarterly)
    Total annual interest earned Rs.2,234. Rs.1,195.
    Total account balance after one year Rs.26,234. Rs.25,195.

    The difference in total income between Fixed Deposit and Recurring Deposit Accounts is Rs.1,039 – as can be seen in the above example. Both types of accounts have their own benefits and drawbacks, but the bottom line is that you earn more with a Fixed Deposit Account (even though the Recurring Deposit Account allows you to stagger your investments in smaller equal portions).

    Perfect Fixed Deposits Deals for you

    Fixed Deposit vs Recurring Deposit Reviews

    • Axis Bank Fixed Deposit
      "Services are good"
      0.5 5.0/5 "Blown Away!"
      I also bank with Axis Bank for the fixed deposit. The customer support and response is good. There are no hassles in the process. I could open this account online. The lock in period is for one year. The rate of interest they provide on my savings is also satisfactory.
      Was this review helpful? 0
      , pune
      Reviewed on Feb 15, 2019
    • SBI Fixed Deposit
      "Good service"
      0.5 4.0/5 "Great!"
      I have fixed deposit with SBI,As per the bank norms rate of interest is up to 6.88%. I opened the account through bank, There is no maturity period, like it is no fixed period, i can keep on deposit whenever i want and i take whenever i need it is unlimited, Their service is good.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 14, 2019
    • SBI Fixed Deposit
      "Good saving for future"
      0.5 4.0/5 "Great!"
      SBI FD account is good, 2 months back I opened this account through offline, I have invested some amount its good, the interest rate is around 8% per annum. The customer support is very good . I can access account through online banking its fine.
      Was this review helpful? 3
      , bangalore
      Reviewed on Feb 09, 2019
    • ICICI Bank Fixed Deposit
      "Need to increase the interest rate"
      0.5 5.0/5 "Blown Away!"
      I do have a fixed deposit account with ICICI and it was taken recently. I have chosen ICICI because my salary and saving account was maintained with them. I am getting good response from the customer service. They are giving average interest rate. I do monthly deposit of less than 50K.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 09, 2019
    • Kotak Fixed Deposit
      "Good features"
      0.5 5.0/5 "Blown Away!"
      Kotak Mahindra Bank is good in their customer services. I bank with them for the fixed deposit. I could open this account online. The lock in period is for one and half year. The rate of interest is really good. I could also close the account online.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 07, 2019
    • SBI Fixed Deposit
      "Safe and secured investment"
      0.5 5.0/5 "Blown Away!"
      Currently FD interest rate is around 6.5% for per annum. I deposited one time amount of Rs. 2 lakhs for one year, I have activated the service through online, I have netbanking option to track the details, before expiry if we withdraw the amount but there will be interest various applicable.
      Was this review helpful? 2
      , bangalore
      Reviewed on Feb 07, 2019
    • HDFC Bank Fixed Deposit
      "Good"
      0.5 4.5/5 "Excellent!"
      I have a fixed deposit with HDFC which was started 2 years back. I have chosen it mainly for the interest rate and also its convenient to open this account online also am a salary account holder. The locking period is 5 years. I never faced issues with the customer service. They need an improvement on interest rate because I think it could be better.
      Was this review helpful? 3
      , bangalore
      Reviewed on Feb 01, 2019
    • SBI Fixed Deposit
      "Good for savings"
      0.5 4.0/5 "Great!"
      I have fixed deposit with SBI, I deposited one time amount of Rs. 2 lakhs. As per the bank norms rate of interest is 11.50%, I opened the account through bank, on time they activated the fixed deposit. There is no proper coordination with the staff end.
      Was this review helpful? 7
      , hyderabad
      Reviewed on Feb 01, 2019
    • review Fixed Deposit
      "Need scope of improvement on the online tech"
      0.5 4.0/5 "Great!"
      I have FD account with Janakalyan Sahakari bank, the interest rate is quite good. We can invested the minimum amount from Rs. 20,000 to max amount. I have term of one year, I opened the FD through branch, but for the activation they taken 48 hours. To track the FD details I need to visit to the bank.
      Was this review helpful? 3
      , mumbai
      Reviewed on Jan 28, 2019
    • YES Bank Fixed Deposit
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have the fixed deposit account with the Yes bank and the interest rate they have given me is good, and i had started this investment a long time back. The interest rate with them has also been good. They have given me up to 8% approx it high compare to other bank, that is best part, and On line banking services are fine one too and am really happy with them, but maturity period was not expired.
      Was this review helpful? 5
      , mumbai
      Reviewed on Jan 26, 2019
    • Punjab National Bank Fixed Deposit
      "Easy online access"
      0.5 3.5/5 "Pretty good"
      I have opened Fixed deposit account through online in PNB, depend upon the customer I can chose the tenure period. The interest rate is okay for the fixed deposit and they don't have any charges for the pre matured withdrawal. I can track my deposits through online.
      Was this review helpful? 2
      , mumbai
      Reviewed on Jan 25, 2019
    • HDFC Bank Fixed Deposit
      "Good investment"
      0.5 5.0/5 "Blown Away!"
      I have invested in the fixed deposit for the amount of Rs. 1 lakh for 10 years, the interest rate is around 9% per annum. I went to the bank and opened the FD, there is no charges for pre matured withdrawal. The executive explained each benefits of the FD.
      Was this review helpful? 5
      , bangalore
      Reviewed on Jan 24, 2019
    • HDFC Bank Fixed Deposit
      "Good Investment plan"
      0.5 4.0/5 "Great!"
      I have taken Fixed deposit account from HDFC bank where am getting good benefits from them . There is no charges for the account . Where they are giving good rate of interest i have chosen long term investment plan.Overall am satisfied with the service and response .
      Was this review helpful? 4
      , ahmedabad
      Reviewed on Jan 23, 2019
    • SBI Fixed Deposit
      "Need quick service"
      0.5 2.0/5 "Expected more"
      I have invested Rs. 2 lakhs in SBI fixed deposit, the interest will be calculated 7.5% for per year. They don't have any fee for account maintenance. I went to the branch to open fixed deposit but they taken 2 days of time to activate because they collected lots of documents for FD account opening.
      Was this review helpful? 8
      , hyderabad
      Reviewed on Jan 21, 2019
    • SBI Fixed Deposit
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I have invested the fixed deposit with State bank of India.the services which they had provided so far has been average.The interest rate with them has been good and the growth with the investment has also been good.maturity period going to get renewal.one it will get mature will do renew of that deposit,there overall service is quite average.
      Was this review helpful? 2
      , bhubaneshwar
      Reviewed on Jan 21, 2019
    • Bank of Maharashtra Fixed Deposit
      "Good"
      0.5 5.0/5 "Blown Away!"
      I have a Fixed Deposit in Bank of Maharashtra because its near to my place but the interest rate is very low compared to Punjab Maharashtra Cooperative Bank. It was opened before one year and have deposited 6L. I think the rate of interest is 8.25%. The services are excellent, I would suggest them to increase the interest rate.
      Was this review helpful? 0
      , new delhi
      Reviewed on Jan 19, 2019
    • SBI Fixed Deposit
      "Good FD account"
      0.5 5.0/5 "Blown Away!"
      I have invested the fixed deposit with State bank of India. Since the branch is nearest by my home and they have given me a locker facility hence i have chosen the fixed deposit with SBI. Overall, I'm very much satisfied with the services with SBI.
      Was this review helpful? 5
      , hyderabad
      Reviewed on Jan 18, 2019
    • YES Bank Fixed Deposit
      "Fraud by Yes Bank"
      0.5 1.0/5 "Really Bad"
      Yes Bank has not credited Interest for my Fixed Deposit. On enquiring they gave me a story that the interest amount has been adjusted towards TDS. They have not provided credit entry for the interest and the debit entry for the TDS respectively.
      Was this review helpful? 5
      , bhopal
      Reviewed on Jan 11, 2019
    • ICICI Bank Fixed Deposit
      "Smart Investment"
      0.5 5.0/5 "Blown Away!"
      In ICICI fixed deposit interest rate is around 6.75% per annum, I opened the FD through online. I have invested Rs. 1 lakh they wont take any charges for the pre matured fixed interest. I believe the interest rate is good compared to the government bank.
      Was this review helpful? 3
      , yamuna nagar
      Reviewed on Jan 10, 2019
    • review Fixed Deposit
      "Very very worst bank"
      0.5 0.5/5 "Unacceptable"
      Really very very very worst bank, even don't open a account here. the are charging continously without any reason, really i am very upset and disappointed with this bank. Interest rate for loan is very high. workers of this bank also money motivated.
      Was this review helpful? 1
      , erode
      Reviewed on Jan 10, 2019
    Common Loader Icon

    Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

  • reTH65gcmBgCJ7k
    This Page is BLOCKED as it is using Iframes.