Both Fixed Deposits (FDs) and Recurring Deposits (RDs) are considered among the safest savings instruments in India. But they suit very different savers. Here's a clear, numbers-based comparison so you pick the right one for your goal.
Fixed Deposit in One Line
You deposit a lump sum once and lock it for a chosen tenure. Interest is calculated quarterly and paid on maturity (or periodically if you choose). Learn more on our FD page.
Recurring Deposit in One Line
You commit to depositing a fixed amount every month for a chosen tenure. Ideal if you have monthly income but no lump sum to lock. See YoursPay RD plans.
The Big Difference: How Interest Compounds
In an FD, the entire deposit earns interest from day one. In an RD, each monthly instalment earns interest only from the date it is deposited. So over the same tenure and rate, an FD earns more absolute interest than an RD with equal total contribution.
₹1 Lakh Example — 1 Year at 7.5% p.a.
| FD (₹1,00,000 upfront) | RD (₹8,333/month × 12) | |
|---|---|---|
| Total invested | ₹1,00,000 | ₹99,996 |
| Interest earned | ~₹7,500 | ~₹4,100 |
| Maturity value | ₹1,07,500 | ~₹1,04,100 |
When to Choose FD
You already have savings sitting idle in a bank account. You don't need the money for a fixed period. You want the highest guaranteed return. Try our FD Calculator to see exact maturity.
When to Choose RD
You earn a monthly salary and want to build a lump sum for a specific goal (child's fees, festival, vacation). Discipline matters more than absolute return. Use the RD Calculator to plan.
Tax on FD and RD Interest
Both are fully taxable as per your income slab. TDS applies if annual interest crosses ₹40,000 (₹50,000 for senior citizens) — see the current Income Tax Department circulars. Submit Form 15G/15H if your income is below the taxable limit.
Frequently Asked Questions
Is deposit insurance available on FDs and RDs?
Yes. As per DICGC rules, deposits up to ₹5 lakh per depositor per bank are insured. Read the current guidelines on the DICGC website.
Can I break my FD before maturity?
Yes, but you lose a small percentage of interest (usually 0.5% – 1%). YoursPay offers flexible partial-withdrawal FDs where you can pull out a portion without breaking the full deposit.
Do senior citizens get higher rates?
Yes — typically 0.25% to 0.50% above standard FD/RD rates. YoursPay offers a dedicated senior citizen FD scheme with even higher returns.
Talk to a YoursPay advisor — visit our Hasthampatti head office in Salem or call +91 98945 76238. First consultation is always free.