Fixed Deposit Vs Recurring Deposit: Which Is The Better Option?

Fixed deposits (FD) and Recurring deposits (RD) are favourable investment tools financial institutions offer. It is because both the instruments are safe, fixed income and low-risk.
OPEN FD
4 mins
14 Oct 2022

It is a well-acknowledged fact that idle money is a killer of savings because it does not inherently appreciate and does not beat inflation. It is why investing your savings becomes a crucial step in pursuit of growing wealth. However, choosing the perfect option can be challenging.

Fixed Deposits (FD) and Recurring Deposits (RD) are favourable investment tools financial institutions offer. It is because both the instruments are safe, fixed income and low-risk. But the FD scores better when it comes to earnings with another set of other benefits. Let us look at both investment plans to understand the differences better.

What is a Fixed Deposit?

Generating wealth is a steady process that requires regular saving and investing. The fixed deposit is an all-time favourite investment option for Indian investors. The FD is suitable for all investors, especially because it is a safe tool. Bank FD generally offer lower interest rates as compared to company FD. Company FD like Bajaj Finance offer both safety and attractive FD interest rates.
Here is why the Bajaj Finance Fixed Deposit is a good option.

  • Certainty of returns
    The Bajaj Finance Fixed Deposit guarantees the highest deposit safety. It has been credited with the highest [ICRA]AAA(Stable) and CRISIL AAA/STABLE ratings by India's leading credit rating agencies.
  • Impressive returns
    Bajaj Finance FD offers fixed deposit interest rates up to 8.60% p.a. making it one of the highest interest rates any financial institution provides.

FD rates for customers below 60 years

Fixed Deposit Annualized rate of interest for non-senior citizens valid for deposit up to Rs. 5 crore (w.e.f 10 May, 2023)
*special interest rates are offered on tenure of 15, 18, 22, 33, and 44 months.

Non-Senior Citizen – Special Period
Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
15* 7.45% 7.21% 7.25% 7.32% 7.45%
18* 7.40% 7.16% 7.20% 7.27% 7.40%
22* 7.50% 7.25% 7.30% 7.36% 7.50%
30* 7.45% 7.21% 7.25% 7.32% 7.45%
33* 7.75% 7.49% 7.53% 7.61% 7.75%
44* 8.35% 8.05% 8.10% 8.18% 8.35%

Non-Senior Citizen – Regular Period

Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
12 - 14 7.40% 7.16% 7.20% 7.27% 7.40%
>15-23 7.50% 7.25% 7.30% 7.36% 7.50%
24 7.55% 7.30% 7.35% 7.41% 7.55%
25-35 7.35% 7.11% 7.16% 7.22% 7.35%
36 - 60 8.05% 7.77% 7.82% 7.89% 8.05%

FD rates for customers above 60 years

Fixed Deposit Annualized rate of interest for senior citizens valid for deposit up to Rs. 5 crore (w.e.f 10 May, 2023)
*special interest rates are offered on tenure of 15, 18, 22, 30, 33, and 44 months.

Senior Citizen – Special Period
Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
15* 7.70% 7.44% 7.49% 7.56% 7.70%
18* 7.65% 7.39% 7.44% 7.51% 7.65%
22* 7.75% 7.49% 7.53% 7.61% 7.75%
30* 7.70% 7.44% 7.49% 7.56% 7.70%
33* 8.00% 7.72% 7.77% 7.85% 8.00%
44* 8.60% 8.28% 8.34% 8.42% 8.60%

Senior Citizen – Regular Period

Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
12 - 14 7.65% 7.39% 7.44% 7.51% 7.65%
>15-23 7.75% 7.49% 7.53% 7.61% 7.75%
24 7.80% 7.53% 7.58% 7.65% 7.80%
25 - 35 7.60% 7.35% 7.39% 7.46% 7.60%
36 - 60 8.30% 8.00% 8.05% 8.13% 8.30%

What is a Recurring Deposit?

Various financial institutes in India offer the facility of a recurring deposit (RD) account. The RD is a very reliable investment tool ensuring the safety of invested money. One can make periodic deposits and earn sizeable returns on the investment at maturity. You can start an RD with an investment of just Rs. 500. This savings plan is ideal for risk-averse investors. Returns generally vary between 5% to 8% p.a.
Here are some of the highlights of the Recurring Deposit (RD)

  • Assured returns
    This savings instrument is not market-linked; it is a fixed-income instrument. Recurring deposits give assured returns to investors.
  • Fixed interest rates
    The RD interest rates are locked-in at the time of booking the RD, and it remains the same throughout the chosen tenure. Making it easy to calculate returns at maturity.

After going through this information, you can now evaluate your options and choose an investment plan that suits you best. However, as you can see, the returns provided by company FD like Bajaj Finance Fixed Deposit can get you more earnings than the recurring deposit.

Major Differences Between: Recurring Deposit V/s Fixed Deposit

Parameters Recurring Deposit Account Fixed Deposit
Meaning RD is where investors invest a fixed amount each month in the RD account. FD is where the investors make a one-time investment in an FD for a fixed tenure.
Eligibility Investor: Individuals (including minors) and non-individual investors
Minimum Age: 10 years		 Investor: Individuals (including minors) and non-individual investors
Minimum Age: 10 years
Benefits Disciplined investing A good option to park excess funds
Compounding benefit Compounding benefit
Minimal risk Minimal risk
High returns Moderate to high returns
Way of Investing Periodical (like SIP) Lumpsum
Maturity Depends upon the tenure selected by the investor. The minimum maturity period is 6 months for most Depends upon the tenure selected by the investor. The minimum maturity period starts at 7 days.
Withdrawal Withdrawal can be done after the tenure expires. Premature withdrawal can attract penal charges. Withdrawal can be done after the tenure expires. Premature withdrawal can attract penal charges.
Tenure At the discretion of the investor At the discretion of the investor
Ideally Suited For Risk-averse investors who want to invest small amounts periodically. Risk-averse investors who want to invest a lump sum amount.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.