FD vs RD: Difference, Returns and Which to Choose
Updated 5 November 2026
An FD invests one amount once; an RD invests a fixed amount every month. Both pay a fixed rate and are safe, but an FD earns more on the same total because all of it earns interest from day one.
Side by side
| Fixed deposit (FD) | Recurring deposit (RD) | |
|---|---|---|
| How you invest | One amount at the start | Same amount every month |
| Best for | Money you already have | Saving from monthly income |
| Interest rate | Set by bank; post office 5-year: 7.5% | Set by bank; post office 5-year: 6.7% |
| Tax | Interest taxed at your slab | Interest taxed at your slab |
| Missed payment | Not applicable | Small penalty, account can be revived |
Which earns more?
₹3 lakh in an FD at 7% for 5 years becomes about ₹4,24,433. ₹5,000 a month in an RD at 7% for 5 years (also ₹3 lakh in total) becomes about ₹3,59,664. The FD earns more because the money sits there longer.
Choose an RD if
- You do not have a lump sum but can save every month.
- You are saving for a known cost in 1 to 5 years.
Try it
Open the FD calculator and enter your own numbers. Words you don't know are explained in the money glossary.