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Fixed Deposit vs. Recurring Deposit: What's the Difference?

Edited by Aimie Carlson || By Janet White || Published on November 1, 2023
A Fixed Deposit is a lump sum investment earning interest over a set period, while a Recurring Deposit involves periodic contributions earning interest over time.

Key Differences

A Fixed Deposit is a financial instrument where individuals place a lump sum of money with a bank or financial institution for a predetermined period. This sum earns interest over that specified duration. In contrast, a Recurring Deposit allows individuals to deposit a fixed sum at regular intervals, typically monthly, into an account that also accumulates interest.
In the case of a Fixed Deposit, the initial investment remains untouched until maturity, earning a fixed rate of interest. This means that after placing the deposit, no additional contributions are made. On the flip side, a Recurring Deposit requires consistent contributions over the term of the deposit, with the individual making regular deposits, facilitating a savings habit.
Interest rates for Fixed Deposits are generally higher compared to Recurring Deposits, given the lump sum nature of the investment. Recurring Deposits, however, offer flexibility, allowing individuals to save smaller amounts at regular intervals, making it suitable for those with consistent but lower monthly savings capacity.
Both Fixed Deposits and Recurring Deposits are favored for their low risk and assured returns. They serve different financial needs: Fixed Deposits are ideal for those with a sizeable amount ready for investment, while Recurring Deposits cater to those aiming to build savings over time.

Comparison Chart

Nature of Deposit

Lump sum at once.
Periodic contributions (usually monthly).

Interest Rates

Generally higher.
Might be slightly lower than Fixed Deposits.


Suitable for investing a large sum.
Encourages regular savings.


No further contributions.
Requires regular deposits over time.

Maturity Amount Calculation

Based on single initial amount.
Based on total amount contributed over time.

Fixed Deposit and Recurring Deposit Definitions

Fixed Deposit

Fixed Deposits earn interest at a predetermined rate until maturity.
His Fixed Deposit earned him a 5% interest annually.

Recurring Deposit

A Recurring Deposit is a savings tool requiring periodic contributions.
He set up a Recurring Deposit to save $100 every month.

Fixed Deposit

Fixed Deposits remain untouched until the end of the chosen term.
Once her money was in the Fixed Deposit, she couldn't access it for two years.

Recurring Deposit

Recurring Deposits generally have a fixed tenure and interest rate.
Their Recurring Deposit offered a 4.5% interest rate for a 2-year term.

Fixed Deposit

Fixed Deposits offer guaranteed returns on the invested amount.
Their Fixed Deposit assured them a return of $500 after a year.

Recurring Deposit

Recurring Deposits promote a disciplined savings habit.
Starting a Recurring Deposit helped her save consistently.

Fixed Deposit

Fixed Deposits are low-risk financial instruments.
For a safer option, he chose a Fixed Deposit over stocks.

Recurring Deposit

Recurring Deposits earn interest on the accumulated amount.
The interest from their Recurring Deposit added to their savings.

Fixed Deposit

A Fixed Deposit is a one-time investment with a bank for a specific period.
She invested $10,000 in a Fixed Deposit for three years.

Recurring Deposit

Recurring Deposits facilitate building savings over time.
To save for their vacation, they opened a Recurring Deposit.


Can I withdraw from my Fixed Deposit before its maturity?

Yes, but early withdrawal might lead to penalties or reduced interest.

What is a Fixed Deposit (FD)?

A Fixed Deposit is a savings account where money is deposited for a specified period and a fixed interest rate is earned.

Which typically has a higher interest rate, FD or RD?

FD usually offers slightly higher interest rates than RD.

How often do I contribute to a Recurring Deposit?

Typically, contributions to an RD are made monthly.

Can I open an FD or RD for my child?

Yes, many banks offer FDs and RDs specifically designed for minors, operated by guardians.

Are both FD and RD safe investment options?

Yes, both are considered low-risk as they're often offered by reputed banks and financial institutions.

Can I add more money to my Fixed Deposit after opening it?

No, FDs are one-time deposits, and you can't add to the initial amount.

How does a Recurring Deposit (RD) differ from FD?

RD involves regular deposits over a set period, while FD is a lump sum deposit earning interest till maturity.

Is the interest rate of my RD fixed or can it change over time?

RDs usually have a fixed interest rate for the tenure you choose.

What happens if I miss a monthly payment in my RD?

Missing an RD installment might result in penalties or reduced interest earnings.

How is the interest calculated for FD and RD?

FD interest is typically compounded quarterly, while RD interest might be compounded every month.

Can I get a loan against my Fixed Deposit?

Yes, many banks allow loans against FDs, usually up to 80-90% of the deposit value.

What's the usual tenure for Fixed Deposits?

FD tenures can range from 7 days to 10 years, depending on the bank and country.

Can I convert my FD into an RD or vice-versa?

No, once opened, FDs and RDs can't be converted. However, you can close one and start the other with the received amount.

Do I have to pay tax on the interest earned from FD and RD?

Yes, interest earnings might be taxable based on your country's tax laws and your income bracket.

Are there any additional benefits for senior citizens with FDs and RDs?

Many banks offer higher interest rates for senior citizens on both FDs and RDs.

What happens to my FD if I don't claim it after maturity?

The FD might be renewed automatically, or the amount might lie with the bank earning minimal or no interest.

Can the maturity date of my RD be extended?

Once an RD is opened, its tenure is fixed, but you can start a new RD after the current one matures.

Can I have a nominee for my Recurring Deposit?

Yes, you can appoint a nominee to claim the RD amount in case of unforeseen circumstances.

Do FDs and RDs have a minimum deposit requirement?

Yes, but the amount varies among banks and the specific FD or RD scheme.
About Author
Written by
Janet White
Janet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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