Which gives better returns - FD or RD?

Fixed Deposit (FD) always gives better returns than RD for the same amount and tenure. This is because in FD, your entire principal earns interest from day 1, while in RD, deposits are made monthly so earlier deposits earn more than later ones.

When should I choose RD over FD?

Choose RD when: (1) You don't have a lump sum to invest, (2) You want to build savings discipline, (3) You receive salary monthly and want to save systematically, (4) You need flexibility to stop deposits if needed.

What is the interest rate difference between FD and RD?

Most banks offer the same interest rate for both FD and RD. However, FD earns more total interest because the full amount compounds from day 1, while RD deposits are spread over time.

FD vs RD Comparison

Compare Lump Sum Fixed Deposit with Monthly Recurring Deposit

Total Amount (₹)

Fixed / Recurring Rate (% p.a.)

Savings A/C Assumption (% p.a.)

Interest earned on the money waiting to be deposited in RD.

Tenure (Years)

📊 Comparison Scenario

Option A (FD): Invest ₹1,00,000 immediately.
Option B (RD): Keep money in Savings (@3%) and transfer ₹1,667/month to RD.

🏦 Fixed Deposit

Lump Sum Investment

₹1.42L

Total Interest ₹42,000

Effective Rate 8.2%

📅 RD + Savings

Systematic Transfer

₹1.28L

Total Returns ₹28,000

Interest Components

RD: 20k • SB: 8k

🏆

FD gives ₹14,000 more!

Even with Savings interest, upfront FD wins due to higher immediate compounding.

💡 why accounts differ?

With FD, your money works at the high rate (e.g., 7%) from Day 1. With RD, the money sits in Savings (e.g., 3%) waiting to be invested, lowering the overall return.

🎯 The Opportunity Cost

The difference shows the "opportunity cost" of not investing the lump sum immediately. Every month the money sits in savings, it loses potential growth.

⚠️ Tax Treatment

Both FD and RD interest, as well as Savings interest (above ₹10k limit), are fully taxable via TDS or effective tax slab.

Strategic Next Steps

Calculate FD Only

Get detailed FD maturity calculation with different compounding options.

Go to FD Calculator →

Calculate RD Only

See detailed RD growth chart with quarterly compounding.

Go to RD Calculator →

Explore SIP Instead

For higher returns, consider equity SIP with 12%+ historical returns.

Go to SIP Calculator →