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Fixed Deposit vs. Recurring Deposit – Which is the better option?


Both the terms fixed deposit and recurring deposit in a simple way are concerned with the assurance and safety of the money that has been invested. In both the cases of fixed and recurring deposits, a person invests money with a surety of getting a good return and some benefits, later on, be it for a long time or less.

The main attraction in both the cases of RD and FD is the return of the money that is being invested by the customer. In this article, we would be a helping hand for the people to decide which one is better and would be beneficial for them over some time. The different types of recurring deposits and fixed deposits, allows you to invest your hard-earned money wisely.

What do we understand by a Fixed Deposit?

Fixed Deposit is one of the best ways to increase the invested money with safety. This allows one to invest some amount of money and also choose a period as per convenience as in when they want their money in hand. In banking or non-banking sectors, the interest rates vary. From the time one has started depositing the money, an interest gets added to the amount through the tenure and then it would remain the same till maturity.

The money remains secured even in difficult situations like market fluctuations. Interest can be calculated on a periodic or monthly basis. Calculate your FD Interest rate here!

Some key benefits of having a Fixed Deposit(FD)

Now we have an idea about what a fixed deposit is, so now let’s have a look at what are the main benefits of investing money in a fixed deposit.

  1. Fixed deposits provide great stability and assurance to the money that is being invested.
  2. The return of the money invested is confirmed with the selected rate of interest and tenure.
  3. Fixed Deposit remains unaffected in any situation like market fluctuations, one will get the exact amount after the tenure completion.
  4. The FD rates provided by banks are lower than the rates offered by Non-banking financial services.
  5. One gets to choose their tenure of money deposition and can easily withdraw after completion. So, therefore it is very flexible.
  6. Some of the companies also provide special offers for a higher rate of interest for senior citizens.

Some negative points of a Fixed Deposit

  • One cannot withdraw the money in between the tenure period before it matures. If this happens, one has to give the required penalties for the same.
  • There is no protection against inflation. The rate of interest remains fixed and unaltered till the completion of the tenure.
  • There always remains a risk, often the non-financial banking companies do not provide what they had once promised. They might attract people by giving a higher rate of interest than others, but the more risk of the money to be invested comes with it as well.

What do we understand by a Recurring Deposit?

If spoken about low-risk and high-security investment options, Recurring Deposit comes into the play. Recurring deposit is one of the best ways of investment, where one can invest their money without a doubt. It is flexible, secured and comes with a handful of benefits for the future.

Money can be invested in a recurring account, starting from a tenure of 6 months till 10 years, and that is absolutely in the hands of the one who is investing. Big reputed banks, as well as non-banking financial companies, also offer different types of recurring deposits for long or for a short period of time.

The key benefits of a Recurring Deposit are:

  • The safe and secured investment plan.
  • The minimum amount to open an account is very low. So, if one doesn’t have a huge amount to invest at first in an RD account, he can start with a small amount every month.
  • The tenure is very flexible, it is from 6 months to 10 years. So, both short- and long-term plans are available.
  • The rate of interest generally varies from sector to sector, still, it remains around 5%-8%.

Some negative points of a Recurring Deposit

  • Withdrawal of money before the tenure is not allowed.
  • The rate of interest is lower than other plans.
  • The investment amount for every month cannot be changed. Hence, not flexible.

The One to Invest in

Now we have discussed much on both the Fixed Deposit and Recurring Deposit accounts, now an investor must be confused as to where to invest his/her hard-earned money with a surety of getting good returns in the future. So, let us discuss the main points, where FD and RD differ.

  • The rate of interest in an FD is much higher than an RD.
  • The minimum duration for an FD is 7 days and for an RD it is 6 months.
  • FD is deposited for a fixed time period, RD is for a small time, just to channelize the monthly savings.
  • Investing a huge amount gives higher interest rates rather than investing in short intervals. Thus, benefits in returns in FD are more than that of an RD.


It is very important to channelize your money and create savings for yourself and your family and earn long term benefits. One should always know their priorities and requirements the best and move forward at choosing the one scheme that would suit their needs. Be it an RD or an FD account, one should always go for the one that serves them the best. So, we have discussed much on both the plans, so it is totally up to you which one you choose!


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