FDs and RDs are the two classic bank savings products, and people often mix them up. Both are safe, both lock your money for a fixed term, and both pay similar rates. The real difference is how you put money in: all at once for an FD, or a set amount every month for an RD. That single difference changes how much interest you earn and who each product suits.
FD vs RD at a glance
| Feature | FD | RD |
|---|---|---|
| Investment | Lump sum | Fixed monthly |
| Minimum deposit | ₹1,000 (varies) | ₹100 / month |
| Interest rate | 6.25% to 7.10% | Similar to FD |
| Compounding | Quarterly | Quarterly |
| Total interest earned | Higher | Lower (same money) |
| Lock-in | Fixed tenure | Fixed tenure |
| TDS | Above ₹50K/yr | Above ₹50K/yr |
| Best for | Lump-sum savers | Regular monthly savers |
Returns compared: the same money, two ways
Say you have ₹1,00,000 to save over one year at 6.5%. In an FD, the whole amount earns interest for the full year, growing to about ₹1,06,716 with quarterly compounding. In an RD, you would put in about ₹8,333 a month; because the later instalments earn interest for only a few months, the total grows to roughly ₹1,03,384. The FD earns more because the full amount compounds from day one. Check both with the FD calculator and the RD calculator.
When to choose an FD
Choose an FD when you already have a lump sum, a bonus, a maturity payout or accumulated savings, that you do not need for a while. Locking it in one go earns the most interest and is the simplest option.
When to choose an RD
Choose an RD when you want to build savings from your monthly income without needing a lump sum upfront. It enforces a saving habit, accepts small amounts, and is ideal for short-term goals you are funding from each paycheck. Many people run both: an FD for existing money and an RD for ongoing saving.
Financial Disclaimer: The comparisons on this page are for informational and educational purposes only. Returns, rates and tax rules are subject to change. Past investment performance does not guarantee future results. Consult a qualified financial advisor before making investment or tax decisions. Full disclaimer.
Frequently asked questions
Is FD or RD better?
It depends on whether you have a lump sum or save monthly. A fixed deposit suits a one-time amount you can lock away, and it earns more because the full sum compounds from day one. A recurring deposit suits regular monthly saving from your salary, building the habit even if the total interest is a little lower for the same money. Neither is universally better; they fit different cash-flow situations.
Why does an FD earn more than an RD for the same money?
In an FD the entire amount is invested on day one, so every rupee earns interest for the full term. In an RD you add money each month, so the later instalments have far less time to grow. Put the same total into both over a year and the FD comes out ahead simply because the average money is invested for longer.
What are FD and RD interest rates in 2026?
As of June 2026, large banks like SBI and Bank of Baroda offer roughly 6.25% to 6.60% on fixed deposits, while HDFC and ICICI go up to about 6.50%. Recurring deposit rates are usually similar to FD rates for the same tenure, and the Post Office RD pays around 6.70%. Small finance banks can offer more. Always confirm the current rate with your bank.
Is the interest on FD and RD taxable?
Yes. Interest from both FDs and RDs is added to your income and taxed at your slab. Banks deduct TDS once interest crosses ₹50,000 in a year for general depositors, or ₹1,00,000 for senior citizens. You can submit Form 15G or 15H to avoid TDS if your total income is below the taxable limit.
Can I open an RD and an FD together?
Absolutely. A common approach is to park any lump sum in an FD and channel your monthly surplus into an RD. That way the one-time money earns the most it can while you also build savings steadily from each paycheck. Both are low-risk, bank-backed and insured up to ₹5 lakh per bank under DICGC.