Differences Between Recurring Deposit and Fixed Deposit

• Team Antworks

Major Difference Between FD and RD

When we talk about RD and FD, there is one single important difference that you must be aware of, before we talk about other differentiating points. While both RD and FD runs over a tenure, FD investors can deposit an amount once while RD investors must deposit a fixed amount at regular intervals.

Fixed Deposit

• Customers who opt for fixed deposits will have to choose a tenure, which usually ranges from 7 days to 10 years, and must deposit an amount once. The interest on the amount will be credited to the investor’s account on a monthly or a quarterly basis.

Recurring Deposit

• When it comes to recurring deposits, investors can deposit a fixed amount every month and can earn interests. The interest is paid along with the capital at maturity.

Recurring Deposit vs Fixed Deposit

Features / Scheme	Fixed Deposit	Recurring Deposit
Tenure	Usually, for FD schemes, the tenure ranges between 7 days to 10 years. The investor can choose a tenure that he is most comfortable with.	Tenure for Recurring deposits usually vary from 1 year to 10 years. The customer has to deposit a fixed amount at regular intervals over the tenure.
Investment Limit	There is no limit on the amount that can be invested in a fixed deposit scheme. But, this limit generally depends on the bank and the minimum investment is Rs. 100 and multiples while the maximum limit is Rs. 1.5 lakh.	While there is no prescribed minimum or maximum limit, this usually depends on the bank. Many banks have the minimum investment limit as Rs. 1000 and and the maximum limit as Rs. 15 lakhs per month.
Rate of Return	For a period of an year, the interest rate varies between 6.96% to 8.00%. The interest rate depends on the capital and tenure opted for. The interest rate for FD is slightly higher than that of RD.	The interest rate varies between 5.25% to 7.90% for a tenure of one year. The rate of interest usually depends on tenure and monthly investment amount.
Tax benefits	For fixed deposit, a tax exemption under the section 80C of Income Tax Act 1961 is applicable.	Income tax will be not deducted if the interest you earn on your rd is up to Rs.10,000.
Documents Required	Identity Proof and address proof. Customers will have to submit documents like PAN card, passport and income documents, if required.	Address proof and Identity Proof. Investors will have to submit documents like PAN card, passport and income documents, if required.
Income Interest	Interest earned on your FD is taxable and most of the banks deduct TDS.	Interest earned on your RD is taxable and most banks do not have the facility of TDS.
Additional Benefits	Loan Facility
Eligibility	Resident Individuals Hindu Undivided Families Public and Private Limited Companies Trusts and Societies Resident Individuals Trusts and Societies Hindu Undivided Families Public and Private Limited Companies
Withdrawal	At the end of tenure. Premature withdrawal is allowed with penalty.	At the end of opted tenure. Premature withdrawal is allowed with penalty.