Types of deposits – Fixed Deposit (FD), Recurring Deposit (RD), Systematic Deposit Plan (SDP)

For those looking to grow their savings with safety and convenience, Fixed Deposit and Recurring Deposits are one of the most preferred savings options. But, the Systematic Deposit Plan (SDP) by Bajaj Finance is the latest entrant in the deposit category, which can help regular savers get assured returns with monthly contributions. Before deciding how to grow your savings, it is best to know about these different types of deposits in detail.

What is a Fixed Deposit (FD)?

A Fixed Deposit (or FD) is one of the most preferred financial instruments, which enables you to invest a lumpsum amount to earn assured returns. The lumpsum amount you invest in FD, remains locked for a specified tenor you choose, during which your savings accrue interest. The interest on your Fixed Deposit is pre-decided and remains unaffected by market forces. Investing in FD can help you reap the benefit of flexible tenors, periodic interest payouts and assured returns.

What is a Recurring Deposit?

A Recurring Deposit (or RD) is an investment instrument that helps you deposit savings at regular intervals, until the end of tenor. The interest is accumulated and credited back to the deposit holder, after completion of tenor, which can range from 6 months to 10 years.

Is RD better than FD?

While Fixed Deposit and Recurring Deposit have their own advantages, investing in FD is preferred to RD due to the higher returns and flexibility offered by FD.

Here’s a look at some reasons that make FD a better investment product than RD:

  • Fixed Deposit enables lumpsum investments for a fixed tenor, whereas Recurring Deposit enables periodic investments on a monthly basis, for a fixed tenor.
  • The tenor for FD ranges from 12 to 60 months, whereas tenor for RD ranges from 6 to 120 months.
  • Interest is paid out at maturity when investing in RD, whereas with FD, you can choose to get returns at maturity, or on a periodic basis.
  • With Bajaj Finance, you can also choose to auto-renew your FDs and get an additional rate benefit of 0.10%, as a non-senior citizen. In RD, there is no such option.

Additionally, Bajaj Finance also offers the option to save on a monthly basis with Systematic Deposit Plan with deposits starting just Rs. 5000 per month.

What is the difference between Fixed Deposit and Recurring Deposit?

Fixed Deposit and Recurring Deposit are one of the most commonly known savings options in India. The table below highlights the differences between RD and FD.

Particulars Recurring Deposit (RD) Fixed Deposit (FD)
Nature of deposit Deposit a fixed amount every month, for a fixed tenor One-time lumpsum deposit for a fixed tenor
Tenor Ranges from 6 to 120 months Ranges from 12 to 60 months
Interest payout frequency Receive payout at maturity Option to receive payout at maturity, or periodically (monthly, quarterly, half-yearly, annual)
Auto-renewal option Unavailable Auto-renew your FD with additional rate benefit of 0.10%

For those looking for a one-time deposit and a convenient savings option, investing in a Bajaj Finance Fixed Deposit can be a great option, as you can reap the benefits of greater flexibility and lucrative returns.

You can reap the benefit of attractive FD interest rates of up to 6.75%, which can help you create a corpus, to fund your financial goals easily.

With the highest safety ratings of FAAA by CRISIL and MAAA by ICRA, Bajaj Finance is a great option for those looking to grow their savings with a Fixed Deposit or Systematic Deposit Plan. Make a smart choice with Bajaj Finance, and lock into attractive interest rates today

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