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Differences Between Recurring Deposit and Fixed Deposit

How Does The Fixed Deposit and Recurring Deposit Schemes Work?

Fixed Deposit and Recurring deposit are two most popular investment schemes in India, specially for the risk averse investors. The major advantage of investing your money in a fixed deposit scheme or recurring deposit plan is that there are fixed returns with no risk. But many a times, investors get confused if they have to invest in a RD plan or a FD scheme. Both RD and FD are fixed income products that are offered by all major banks and financial institutions. In both the schemes, you can invest a specific amount and on the amount invested, you will receive a fixed interest. At the end of tenure, investors will receive both the capital as well as the interest.

Major Difference Between FD and RD

When we talk about RD and FD, there is one single important difference that you must be aware of, before we talk about other differentiating points. While both RD and FD runs over a tenure, FD investors can deposit an amount once while RD investors must deposit a fixed amount at regular intervals.

Fixed Deposit

  • Customers who opt for fixed deposits will have to choose a tenure, which usually ranges from 7 days to 10 years, and must deposit an amount once. The interest on the amount will be credited to the investor’s account on a monthly or a quarterly basis.

Recurring Deposit

  • When it comes to recurring deposits, investors can deposit a fixed amount every month and can earn interests. The interest is paid along with the capital at maturity.

Recurring Deposit vs Fixed Deposit

Features / Scheme Fixed Deposit Recurring Deposit
Tenure Usually, for FD schemes, the tenure ranges between 7 days to 10 years. The investor can choose a tenure that he is most comfortable with. Tenure for Recurring deposits usually vary from 1 year to 10 years. The customer has to deposit a fixed amount at regular intervals over the tenure.
Investment Limit There is no limit on the amount that can be invested in a fixed deposit scheme. But, this limit generally depends on the bank and the minimum investment is Rs. 100 and multiples while the maximum limit is Rs. 1.5 lakh. While there is no prescribed minimum or maximum limit, this usually depends on the bank. Many banks have the minimum investment limit as Rs. 1000 and and the maximum limit as Rs. 15 lakhs per month.
Rate of Return For a period of an year, the interest rate varies between 6.96% to 8.00%. The interest rate depends on the capital and tenure opted for. The interest rate for FD is slightly higher than that of RD. The interest rate varies between 5.25% to 7.90% for a tenure of one year. The rate of interest usually depends on tenure and monthly investment amount.
Tax benefits For fixed deposit, a tax exemption under the section 80C of Income Tax Act 1961 is applicable. Income tax will be not deducted if the interest you earn on your rd is up to Rs.10,000.
Documents Required Identity Proof and address proof. Customers will have to submit documents like PAN card, passport and income documents, if required. Address proof and Identity Proof. Investors will have to submit documents like PAN card, passport and income documents, if required.
Income Interest Interest earned on your FD is taxable and most of the banks deduct TDS. Interest earned on your RD is taxable and most banks do not have the facility of TDS.
Additional Benefits Loan Facility
Eligibility
  • Resident Individuals
  • Hindu Undivided Families
  • Public and Private Limited Companies
  • Trusts and Societies
  • Resident Individuals
  • Trusts and Societies
  • Hindu Undivided Families
  • Public and Private Limited Companies
Withdrawal At the end of tenure. Premature withdrawal is allowed with penalty. At the end of opted tenure. Premature withdrawal is allowed with penalty.

What Should You Choose - RD or FD?

For people who do not have a lump sum to invest in a FD, but can afford a small portion of investment amount from income every month, a recurring deposit (RD) seems to be the right fit. Both RD and FD are best suited for risk averse investors who are mostly in the lower tax slab. Use an online recurring deposit calculator to see what suits best for the amount that you can invest. Although one single investment product cannot meet all needs, a RD is preferred by many because it puts considerably less financial strain and gives almost the same returns as FD.

Read More Article on Recurring Deposit

Recurring Deposit - Sitemap

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Recurring Deposit by Banks
Recurring Deposit by other Institutions

RD Reviews

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  • Kotak Recurring Deposit
    "Nice experience"
    KOTAK MAHINDRA BANK
    0.5 5.0/5 "Blown Away!"
    I also bank with Kotak Mahindra Bank for the recurring deposit. The customer support is good and there are no hassles to open this account online. I earn good interest on it and I can close the account when ever I wish too. I can also deposit what ever amount is suitable for me.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Feb 07, 2019
  • SBI Recurring Deposit
    "Good Savings"
    STATE BANK OF INDIA
    0.5 5.0/5 "Blown Away!"
    Right now SBI RD interest would be 9% per annum, we can make the deposit from Rs.1000 to max, we have the option to prolong the tenure. But I have opt for one year for recurring deposit. I done everything through online, I can withdrawal RD through netbanking.
    Was this review helpful? 2
    , bangalore
    Reviewed on Feb 07, 2019
  • ICICI Bank Recurring Deposit
    "Good"
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    Basically I don't want to close my salary account so have started the recurring account with ICICI Bank before 2 years. I have depositing 10K per month through online. The services are awesome. The interest rate was really good. I am able to manage the account online.
    Was this review helpful? 3
    , bangalore
    Reviewed on Jan 23, 2019
  • review Recurring Deposit
    "Excellent Service"
    STATE BANK OF MAHARASHTRA
    0.5 5.0/5 "Blown Away!"
    I had started this investment plan a pretty long time back and the investment plan is going well, it does not have any tenure period and i am investing on them whenever possible. Their staffs had been very much responsive where i did not had to wait for any of the services or help.
    Was this review helpful? 1
    , new delhi
    Reviewed on Jan 23, 2019
  • Axis Bank Recurring Deposit
    "Good Investment plan"
    AXIS BANK
    0.5 4.0/5 "Great!"
    Axis bank is giving good service for the recurring deposit . There is no charges for the account They are giving good service with online facility where i can clear all my doubts , Its a short term investment plan where they have given good rate of interest based on the market price . Overall its average investments plan . It has some nominal good returns.
    Was this review helpful? 1
    , ahmedabad
    Reviewed on Jan 23, 2019
  • HDFC Bank Recurring Deposit
    "Good Investment with HDFC"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    Monthly I deposit Rs .6500 on HDFC recurring deposit, it has the term of one year. Currently HDFC interest rate is around 7.8% per annum. I can view my recurring deposit transaction through online banking. They have good online facilities.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 19, 2019
  • HDFC Bank Recurring Deposit
    "Easy Online Activation"
    HDFC BANK
    0.5 4.0/5 "Great!"
    Reason to chose the HDFC recurring deposit, its very convenient, I have activated the service through online. I don't need go to the bank. I have taken the RD for 2 years. I am not sure about the interest and but they are taking higher charges for the transaction it should be lesser.
    Was this review helpful? 3
    , hyderabad
    Reviewed on Jan 18, 2019
  • Axis Bank Recurring Deposit
    "Good Savings plan"
    AXIS BANK
    0.5 3.5/5 "Pretty good"
    I am having a Recurring Deposit account with AXIS bank, i read about the terms and conditions of AXIS bank website. Customer service was good and they responded on time. I pay Rs 1000 every month for 10 years and the interest returns is 7.5%.
    Was this review helpful? 4
    , pune
    Reviewed on Jan 17, 2019
  • Axis Bank Recurring Deposit
    "Good Investment for Future"
    AXIS BANK
    0.5 4.0/5 "Great!"
    The reason to chose AXIS Bank recurring deposit is because I have salary account they are providing good interest. I have locking period of 3 years, every month I need to deposit Rs.5500, I think they have less withdrawal charges before maturity of RD.
    Was this review helpful? 2
    , new delhi
    Reviewed on Jan 14, 2019
  • HDFC Bank Recurring Deposit
    "Very good benefits"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    Previously I have invested some money in HDFC recurring deposit. The reason for choosing the bank the interest rate is more and also service is excellent. I have taken the amount and its really beneficial. Whenever I contact the customer service, they are responding properly.
    Was this review helpful? 1
    , bangalore
    Reviewed on Jan 14, 2019
  • HDFC Bank Recurring Deposit
    "Happy RD account"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    Earlier I was having HDFC recurring deposit, I used to investment RS. 1000 on monthly basis, at the time interest percentage was good. I have activated my RD account through online there was no charges withdrawal before tenure period of it.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 10, 2019
  • Canara Bank Recurring Deposit
    "Secured Investment"
    CANARA BANK
    0.5 5.0/5 "Blown Away!"
    I make the monthly investment Rs. 5000 in my recurring deposit for the tenure period of 10 years, I can invest the minimum amount of Rs.500 to 1 lakh. I went to the bank and placed the request through the bank manager, its good for future saving,
    Was this review helpful? 4
    , yamuna nagar
    Reviewed on Jan 10, 2019
  • HDFC Bank Recurring Deposit
    "Excellent Service"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    I had started doing this investment a long time back and it was quite convenient and simple in the services of them. The interest rate which they are offering has been good and the tenure period is for three years. There has not been any hassle faced with the payment methods.
    Was this review helpful? 1
    , pune
    Reviewed on Jan 09, 2019
  • IOB Recurring Deposit
    "Better Bank"
    INDIAN OVERSEAS BANK
    0.5 4.0/5 "Great!"
    Since my wife is working in Indian Overseas Bank, i have invested my money in that bank. I have been investing the money of Rs. 3000. I'm satisfied with the interest rate. I'm not sure about the tenure period. The received services are fine with Indian Overseas Bank.
    Was this review helpful? 0
    , tiruchirapalli
    Reviewed on Jan 09, 2019
  • Central Bank of India Recurring Deposit
    "Good service"
    CENTRAL BANK OF INDIA
    0.5 4.0/5 "Great!"
    I am having a Recurring Deposit account with Central Bank of India, i pay an amount of Rs 2000 every month and i have to pay this amount for 12 months. Customer support was very good and they explained the terms and conditions. I get an interest of Rs 800 after maturity period.
    Was this review helpful? 1
    , new delhi
    Reviewed on Jan 08, 2019
  • ICICI Bank Recurring Deposit
    "Easy RD option with ICICI"
    ICICI BANK
    0.5 4.0/5 "Great!"
    I am able to open the recurring deposit by myself in the online banking of ICICI, the interest rate is good for the RD account. I think they are providing the interest around 6.75% for per annum. I need to pay the RD around Rs.10,000 per month, they don't have charges on the pre matured withdrawal.
    Was this review helpful? 0
    , nagpur
    Reviewed on Jan 08, 2019
  • HDFC Bank Recurring Deposit
    "Convenient RD with HDFC"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    I done recurring deposit with HDFC at the time they gave me 9.2% of interest for one year. I think I had a RD in the period of 2013 to 2014 I don't have exact details it was good experience. when I want to take the amount I done the closure through online. I like the netbanking application its so friendly.
    Was this review helpful? 6
    , new delhi
    Reviewed on Jan 05, 2019
  • HDFC Bank Recurring Deposit
    "Its Better"
    HDFC BANK
    0.5 4.0/5 "Great!"
    Earlier I had recurring deposit with HDFC, they gave me around 6.75% per annum, I have opened the RD through online I can track information through netbanking, at last I didn't get the benefits. Everything and the safe and secured premature charges was not there.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 04, 2019
  • SBI Recurring Deposit
    "Need improvement on their services"
    STATE BANK OF INDIA
    0.5 4.0/5 "Great!"
    I have been using the recurring deposit with SBI for last 11 years. There is no specific reason for choosing the SBI. I'm happy about the interest rate provided to me. I have visited their branch and i need to wait for a long time in a queue and the staffs were not upto the mark however they need to improve a lot.
    Was this review helpful? 14
    , bangalore
    Reviewed on Dec 21, 2018
  • Kotak Recurring Deposit
    "Good Experience for Recurring Deposit"
    KOTAK MAHINDRA BANK
    0.5 4.0/5 "Great!"
    Long back I had Recurring deposit account with Kotak Mahindra, at the time they gave me 8% of recurring interest. I have invested monthly Rs. 10,000 per month for 24 months of duration. The total amount came around Rs. 2 lakhs its fine for me.
    Was this review helpful? 8
    , bangalore
    Reviewed on Dec 20, 2018
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