Fixed Deposit vs Recurring Deposit

Both Fixed Deposits and Recurring Deposits offer a secure way to grow your savings while earning attractive interest rates.
FD vs RD
4 mins
24-June-2025

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.

Features of fixed deposits

Here are the main features that make Fixed Deposits (FDs) a popular investment option:

  • One-Time Investment: FDs involve a lump-sum deposit made at the start, which remains locked in for a fixed period.
  • Flexible Tenure: You can choose a tenure ranging from 7 days to 10 years, depending on your financial goals.
  • Premature Withdrawal Option: Withdrawals before maturity are allowed but may attract a penalty or reduced interest rate.
  • Loan Facility: Many banks allow you to borrow up to 90% of your FD amount without breaking it.
  • Maturity and Payout Choices: At maturity, you can either withdraw the entire amount or reinvest. Some FDs also offer regular interest payouts—monthly, quarterly, or annually.

What should you choose FD or RD?

The choice between fixed deposit vs recurring deposit depends on your financial goals and habits. If you have a lump sum to invest and seek a higher return, FD is a better option. But if you prefer saving small amounts regularly, RD suits you best. Consider your risk tolerance, liquidity needs, and financial discipline before deciding.

Key difference between FD and RD

Here’s a detailed comparison between FD and RD across key factors:

Factor

Fixed Deposit (FD)

Recurring Deposit (RD)

Initial Investment

Requires a one-time lump sum deposit at the beginning

Requires small monthly contributions throughout the tenure

Deposit Frequency

Single deposit only

Regular monthly deposits

Interest Calculation

Interest is calculated on the entire principal amount for the full tenure

Interest is calculated on each deposit separately; overall interest grows over time

Tenure

Ranges from 7 days to 10 years

Typically ranges from 6 months to 10 years

Monthly Contributions

Not applicable

Mandatory fixed monthly payments unless it's a flexible RD like ICICI’s iWish

Flexibility

Limited flexibility after deposit

Offers flexibility in monthly savings, especially in flexible RD schemes

Returns

Generally higher returns due to lump sum compounding from day one

Slightly lower returns as each deposit earns interest for a different duration

Best Suited For

Ideal for those with a lump sum amount ready to invest

Suitable for regular savers with steady monthly income

Risk Level

Low risk, capital-protected investment

Low risk, promotes disciplined saving

Missed Payment Penalty

No penalty, as full amount is deposited upfront

Penalty may apply for missed installments unless it’s a no-penalty RD like iWish

Interest Basis

Interest calculated on the initial lump sum

Interest calculated on each monthly deposit separately

FD rates for customers below the age of 60

Fixed Deposit annualised rate of interest for customers below the age of 60 is valid for deposit amounts from Rs. 15,000 to Rs. 3 crore (w.e.f 11 June, 2025) exclusively on website and app.

Non-Senior Citizens

Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
12 - 14 6.60% 6.41% 6.44% 6.49% 6.60%
15 - 23 6.75% 6.55% 6.59% 6.64% 6.75%
24 – 60 6.95% 6.74% 6.78% 6.83% 6.95%

FD rates for customer above the age of 60

Fixed Deposit annualised rate of interest for senior citizens is valid for deposit amounts from Rs. 15,000 to Rs. 3 crore (w.e.f 11 June, 2025) exclusively on website and app.

Senior Citizens

Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
12 - 14 6.95% 6.74% 6.78% 6.83% 6.95%
15 - 23 7.10% 6.88% 6.92% 6.98% 7.10%
24 - 60 7.30% 7.07% 7.11% 7.17% 7.30%

Calculate your expected investment returns with the help of our investment calculators

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

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Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

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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.