Fixed Deposit (FD) and Recurring Deposit (RD) are two popular savings options offered by banks in India. Both are safe investment choices, but they work in different ways.
In a Fixed Deposit, you invest a lump sum amount for a fixed period. The bank pays interest on the deposited amount until maturity.
Read full guide: What is Fixed Deposit
In a Recurring Deposit, you deposit a fixed amount every month for a specific period. The bank pays interest on the accumulated amount.
| Feature | Fixed Deposit (FD) | Recurring Deposit (RD) |
|---|---|---|
| Deposit Type | One-time lump sum | Monthly deposit |
| Best For | People with spare savings | People who save monthly |
| Flexibility | Less flexible after deposit | Flexible monthly saving habit |
| Interest | Calculated on full amount | Calculated gradually |
If you already have a large amount of money, a Fixed Deposit may be a better option. If you want to build savings gradually every month, a Recurring Deposit is more suitable.
Both FD and RD are safe investments because they are offered by banks and have predictable returns.