The difference in one line
A fixed deposit (FD) invests a lump sum once. A recurring deposit (RD) collects a fixed amount every month. Banks usually offer both at the same rate for the same tenure.
Same rate, different interest
At 7% for one year, compounded quarterly:
| FD | RD | |
|---|---|---|
| You put in | ₹1,20,000 on day one | ₹10,000 a month for 12 months |
| Total deposited | ₹1,20,000 | ₹1,20,000 |
| Maturity value | ₹1,28,623 | ₹1,24,621 |
| Interest earned | ₹8,623 | ₹4,621 |
The FD earns almost twice the interest, because all of its money is invested for the whole year while each RD instalment is invested for less time. That doesn't make the RD worse — it suits money you don't have yet.
When to choose which
- You have the lump sum now → FD.
- You're saving from salary for a goal — a holiday, a gadget, a down payment → RD. It builds the habit and turns monthly savings into a deposit.
- Both: some people run an RD for a year and roll the maturity into an FD.
Things to know
- Both are taxable at your slab rate, and TDS applies to RD interest as well as FD interest.
- Missing an RD instalment can attract a small penalty; several missed instalments may close the account.
- Both can be closed early, usually with a lower rate.
- The Post Office RD (6.7% for 5 years in Oct–Dec 2026) is government-backed.
Try your own numbers with the FD calculator and RD calculator.
For general information only, not investment advice or a recommendation. Oxon Fintech is a loan facilitation platform, not a SEBI-registered investment adviser, bank or mutual fund distributor, and does not sell bonds, deposits or funds. Rates and rules are as checked on the date above; confirm with the issuer, bank or fund house before investing. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.