What is a recurring deposit (RD) and how is it different from an FD?
Updated · CardKhoj Editorial Team
Short answer
A recurring deposit lets you save a fixed amount every month for a set period (6 months to 10 years) and earn FD-like interest. A fixed deposit takes one lump sum upfront. RDs suit people building savings from salary; FDs suit people who already have the money. Interest on both is taxable.
RD vs FD
| Recurring deposit | Fixed deposit | |
|---|---|---|
| How you invest | Fixed monthly instalment | One lump sum |
| Interest rate | Similar to FD of same tenure | Fixed at booking |
| Missed instalment | Small penalty | Not applicable |
| Best for | Building a goal fund from salary | Parking existing savings |
Is an RD better than a SIP?
An RD gives guaranteed returns with no risk, which suits goals within 1–3 years. For goals 5+ years away, an equity mutual fund SIP has historically delivered higher returns, with ups and downs along the way.
This answer is general information, not personalised financial or tax advice. Rules, rates and limits change — confirm with your bank, the RBI or a qualified adviser before making decisions.