FD vs RD: Which is Better for Savings in India? (2025)
Both FD and RD are safe, bank-guaranteed savings instruments. But they serve different purposes.
Fixed Deposit (FD)
You deposit a lump sum once and earn interest over a fixed tenure.
Example: ₹1 lakh in FD at 7% for 2 years (quarterly compounding) → ₹1,14,888 at maturity.
Try our FD Calculator.
Recurring Deposit (RD)
You deposit a fixed amount every month and earn interest.
Example: ₹5,000/month in RD at 6.5% for 24 months → ₹1,29,160 maturity on ₹1,20,000 deposited.
Try our RD Calculator.
Key Differences
| Feature | FD | RD |
|---|---|---|
| Investment | Lump sum | Monthly instalments |
| Interest rate | Slightly higher | Slightly lower |
| Best for | Available corpus | Regular savers |
| Premature withdrawal | Allowed (with penalty) | Allowed (with penalty) |
| Loan against | Yes (up to 90%) | Yes |
Which Earns More?
For the same total amount invested, FD earns more because the principal compounds from Day 1. In RD, each monthly deposit has a shorter compounding period.
FD wins if you already have the money. RD wins if you're building savings from salary.
Tax Treatment
Both FD and RD interest is taxable as per your income slab. TDS at 10% is deducted if annual interest exceeds ₹40,000 (₹50,000 for senior citizens).
Use our calculators to compare: FD Calculator · RD Calculator