RD vs FD: What's the Difference?

Last updated: August 2026

A fixed deposit (FD) invests a single lump sum for a set period. A recurring deposit (RD) invests a fixed amount every month. Both earn a fixed rate and are compounded quarterly by banks.

Which earns more?

For the same rate and the same total amount, an FD usually earns a bit more, because the full sum is invested from day one. In an RD, later deposits have less time to grow.

When to use each

• FD — you already have a lump sum (a bonus, savings) and want to lock it in.
• RD — you want to build savings gradually from your monthly income, with discipline.

Examples

An FD of ₹1,00,000 at 7% for 5 years grows to about ₹1,41,478. An RD of ₹5,000/month at 7% for 5 years (₹3,00,000 invested) grows to about ₹3,59,664. Both are taxable as per your slab.