Fixed Deposits (FDs) and Recurring Deposits (RDs) are two of the safest ways to grow savings. FDs suit a lump sum; RDs suit disciplined monthly saving.
This guide compares them on returns, liquidity and tax.
What is Fixed Deposit vs Recurring Deposit?
An FD locks a lump sum for a chosen term at a fixed interest rate. An RD requires a fixed monthly deposit over a set period, earning interest similar to an FD.
Interest on both is taxable, and TDS may apply above thresholds.
| Fixed deposit | Lump sum, fixed term and rate |
|---|---|
| Recurring deposit | Fixed monthly deposits |
| Tax | Interest taxable; TDS above threshold |
| Safety | Both low-risk |
Frequently asked questions
Is FD interest taxable?
Yes. FD interest is fully taxable, and banks deduct TDS if it crosses the annual threshold.
Which is better, FD or RD?
An FD suits a lump sum; an RD suits building savings from regular monthly income. Returns are broadly comparable.