Saving

FD vs RD: Which Should You Choose?

Fixed Deposit and Recurring Deposit are both simple, guaranteed-return savings products from banks — but they're built for different situations. Here's how to tell which one fits yours.

The core difference

	Fixed Deposit (FD)	Recurring Deposit (RD)
How you deposit	One lump sum, upfront	Fixed amount every month
Best suited for	Money you already have and want to grow safely	Building savings from regular income over time
Interest calculation	On the full principal from day one	On each monthly instalment, from the date it's deposited

Why RD is useful for regular savers

Not everyone has a lump sum sitting idle — many people save gradually from monthly income. RD lets you build a disciplined savings habit, similar to how SIP works for mutual fund investing, but with the safety and guaranteed nature of a bank deposit rather than market-linked returns.

Why FD is useful for lump sums

If you already have a lump sum — savings, a bonus, maturity proceeds from another investment — an FD puts that money to work immediately at a fixed, predictable rate, without needing to wait and accumulate it gradually.

RD and FD interest rates are usually similar at a given bank, since both are low-risk, bank-guaranteed products. The choice mainly comes down to whether you're depositing money you already have (FD) or building it up gradually (RD) — not which one pays more.

A practical combination

Many savers use both: an FD for existing lump-sum savings, and an RD to build toward a specific near-term goal (a trip, a gadget, an emergency buffer) using monthly income. They're not mutually exclusive — the right choice depends on where the money is coming from.

What both have in common

Guaranteed, fixed returns — no market risk
Interest is taxable as per your income slab
Premature withdrawal is usually allowed, typically with a penalty
Deposit insurance coverage applies similarly to both, per applicable limits

See what your FD could grow to

If you're deciding between FD and RD, it helps to first see the numbers for a lump sum you already have.

Open the FD Calculator