Introduction to RD and FD
Both Recurring Deposits (RD) and Fixed Deposits (FD) are popular savings instruments offered by banks and financial institutions in India. While both help you grow your money, they cater to different needs and financial goals. Understanding their differences can help you choose the right option for your savings.
Key Differences Between RD and FD
Here’s a detailed comparison of RD and FD based on various factors:
| Feature | Recurring Deposit (RD) | Fixed Deposit (FD) |
|---|---|---|
| Investment Type | Monthly installments | Lump-sum amount |
| Flexibility | Flexible for regular savers | One-time investment required |
| Tenure | 6 months to 10 years | 7 days to 10 years |
| Interest Rates | Similar to FD rates | Slightly higher than RD |
| Premature Withdrawal | Allowed with penalties | Allowed with penalties |
| Loan Against Deposit | Not commonly available | Available up to 90% of deposit value |
| Ideal For | Regular savers with small monthly contributions | Individuals with lump-sum savings looking for fixed returns |
Benefits of Recurring Deposit (RD)
Here are some key advantages of choosing an RD:
- Disciplined Savings: Helps you save regularly with small monthly contributions.
- Flexibility: Ideal for individuals who cannot invest a lump sum at once.
- Attractive Returns: Offers competitive interest rates similar to FDs.
- No Financial Burden: Small monthly investments ensure no strain on your finances.
Benefits of Fixed Deposit (FD)
Here are some key advantages of choosing an FD:
- Higher Interest Rates: Slightly higher returns compared to RDs.
- Security: Guaranteed returns with no market risks.
- Loan Facility: You can avail loans against your FD up to 90% of its value.
- Short-Term Options: Available for short durations starting from 7 days.
Which One Should You Choose?
The choice between RD and FD depends on your financial goals and saving habits:
- Choose RD If: You want to save regularly with small monthly contributions and prefer disciplined savings.
- Choose FD If: You have a lump sum amount to invest and are looking for slightly higher returns with guaranteed security.
Use our RD Calculator or FD Calculator to estimate your returns and make an informed decision.