FD Vs RD which is better in 2026! Interest Rates & Calculator

💰 Savings Guide · India 2026

FD vs RD:
Which One is Better For You?

Fixed Deposit or Recurring Deposit — both are safe, both are popular. But which one actually gives you more money? We break it down with real numbers, 2026 interest rates, and maturity calculator examples.

● India 2026 Guide ● 10 Min Read ● Beginners Welcome ● Real Calculations

₹180 Lakh Cr

Total bank deposits in India

6.5–7.5%

Typical FD / RD rates in 2026

₹100

Minimum to open an RD account

Your colleague opens an FD. Your neighbour has an RD. But when you sit down to decide — what is the actual difference between FD and RD in India? And more importantly, which one puts more money in your pocket?

This guide gives you a straight answer — with real interest rates for 2026, a step-by-step maturity calculator example, and a clear verdict based on your situation.

⚡ Quick Answer

FD vs RD — The One-Line Verdict

Fixed Deposit (FD) is better if you already have a lump sum to invest. Recurring Deposit (RD) is better if you want to save a fixed amount every month from your salary. FD earns higher returns because the entire amount earns interest from day one.

📋 TABLE OF CONTENTS +

• 1FD and RD — What Are They?
• 2Full Comparison — Side by Side
• 3FD vs RD Interest Rates 2026
• 4Maturity Calculator — Real Numbers
• 5Returns Over 3, 5 and 10 Years
• 6Is FD Better for Monthly Savings?
• 7RD vs FD for Salaried Person
• 8Which is Better for Beginners?
• 9Tax on FD and RD Interest
• 10How to Open FD / RD Online
• 11Better Alternatives to FD and RD
• ?Frequently Asked Questions

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Section 01

1 FD and RD — What Are They, Simply Explained

🏦 Fixed Deposit (FD)

You deposit a large lump sum amount once — say ₹50,000 or ₹1,00,000 — into the bank for a fixed period. The bank pays you a guaranteed interest rate for the entire period. At maturity, you get your original money back plus all the interest earned.

One-time deposit · Lump sum

📅 Recurring Deposit (RD)

You deposit a small fixed amount every month — say ₹1,000 or ₹5,000 — for a fixed period. The bank pays interest on your growing balance. At maturity, you get all your monthly deposits back plus the interest earned.

Monthly deposit · Small amounts

💡 One-line difference: FD = invest once, earn interest on the full amount from day one. RD = invest every month, earn interest on each instalment from when it was deposited. Same safety, very different structure.

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Section 02

2 Difference Between FD and RD — Full Comparison

FD vs RD — Side by Side

Fixed Deposit

Recurring Deposit

One-time lump sum

Investment Type

Every month (SIP-style)

₹1,000 minimum

Min. Amount

₹100 per month

Higher (full amount earns)

Interest Earned

Lower (avg. half earns)

6.5–7.5% (2026)

Interest Rate

6–7.5% (2026)

Lump sum needed upfront

Who It Suits

Salaried / monthly savers

Loan up to 90% of FD

Loan Facility

Available at some banks

Penalty if broken early

Premature Closure

Penalty if stopped early

Added to income, taxed per slab

Tax on Interest

Added to income, taxed per slab

Up to ₹1.5L/year (5-yr Tax FD)

80C Benefit

❌ No 80C benefit

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Section 03

3 FD vs RD Interest Rates 2026 — Bank-Wise Comparison

Here are the latest FD and RD interest rates in 2026 for regular citizens (senior citizens get 0.25–0.50% extra). Rates are for a 1–2 year tenure.

Bank	FD Rate (1–2 yr)	RD Rate (1–2 yr)	Senior Citizen FD
SBI	6.25%	6.25%	6.75%
HDFC Bank	6.45%	6.45%	6.95%
ICICI Bank	6.45%	6.30%	6.95%
Axis Bank	6.45%	6.45%	6.95%
Kotak Mahindra	6.70%	6.70%	7.20%
Jana Small Finance Bank	7.50%	7.50%	8.00%
Equitas Small Finance Bank	6.90%	6.90%	7.50%
Post Office (TD / RD)	7.10%	6.70%	No extra benefit

✅ Key point: In most banks, FD and RD interest rates are identical for the same tenure. The difference in final returns comes not from the rate — but from how interest is calculated. FD earns on the full amount from day one. RD earns on each monthly instalment from when it was deposited — so effective interest earned is lower.

🔒 Safety note: All bank FDs and RDs are insured by DICGC up to ₹5 lakh per bank per depositor. Post Office deposits are backed by the Government of India — 100% safe with no insurance limit.

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Section 04 · Maturity Calculator Example

4 FD vs RD Maturity Calculator — Real Numbers

Let's compare FD and RD returns with the same total money — ₹1,20,000 over 12 months at 7% — so you can see the exact difference. Use our RD & FD calculator to compare yourself →

🧮 Example 1 — Fixed Deposit (FD)

Assumptions

Principal (one-time deposit)₹1,20,000

Interest Rate7% per annum

Duration12 months

CompoundingQuarterly

Result

Principal invested₹1,20,000

Interest earned₹8,613

FD Maturity Amount ₹1,28,613

🧮 Example 2 — Recurring Deposit (RD)

Assumptions

Monthly instalment₹10,000/month

Interest Rate7% per annum

Duration12 months

Total deposited₹1,20,000

Result

Principal invested₹1,20,000

Interest earned₹4,550

RD Maturity Amount ₹1,24,550

📊 FD vs RD — Same ₹1,20,000 Invested at 7% for 12 Months

Fixed Deposit

₹1,28,613

Interest: ₹8,613

Recurring Deposit

₹1,24,550

Interest: ₹4,550

FD earns ₹4,063 MORE than RD — on the same ₹1.2 lakh

⚠️ Why does FD earn more? In an FD, the full ₹1,20,000 earns interest from Day 1. In an RD, your first ₹10,000 earns interest for 12 months, but the last ₹10,000 earns interest for only 1 month. On average, your RD money earns interest for only about 6–7 months — which is why RD interest is roughly half that of FD.

💡 5-Year Example

₹5,000/month in RD at 7% for 5 years → Maturity: ₹3,59,694 (invested ₹3,00,000, earned ₹59,694). The same ₹3,00,000 in a 5-year FD at 7% → Maturity: ₹4,24,358. FD wins by ₹64,664 — but only because you had ₹3 lakh upfront.

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Section 05

5 Recurring Deposit vs Fixed Deposit Returns — 3, 5 and 10 Years

Both at 7% rate, RD at ₹5,000/month, FD with the equivalent lump sum invested upfront.

Duration	FD (Lump Sum)	FD Maturity	RD (₹5K/month)	RD Maturity	FD Advantage
1 Year	₹60,000 upfront	₹64,306	₹5K × 12	₹62,276	+₹2,030
3 Years	₹1.80L upfront	₹2,20,799	₹5K × 36	₹2,00,953	+₹19,846
5 Years	₹3.00L upfront	₹4,24,358	₹5K × 60	₹3,59,694	+₹64,664
10 Years	₹6.00L upfront	₹11,96,883	₹5K × 120	₹8,69,470	+₹3,27,413

💡 The longer the period, the bigger the FD advantage — but only if you have the lump sum available. If you don't have ₹6 lakh sitting idle, RD is the only practical option and still builds meaningful wealth.

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Section 06

6 Is FD Better Than RD for Monthly Savings?

The honest answer: it depends on whether you have a lump sum or not.

Situation	FD or RD?	Why
You have a large lump sum (bonus, inheritance, savings)	FD ✓	Full amount earns from day one. Higher maturity value.
You earn a monthly salary and want to save monthly	RD ✓	Perfect for monthly salary cycles. Forces saving discipline.
You want to save for a specific goal in 1–5 years	RD ✓	Predictable maturity amount. Easy to plan goal-based saving.
You want to park idle cash safely	FD ✓	Idle lump sum should go into FD for maximum interest.
You want tax saving under Section 80C	5-Year FD ✓	Tax-saver FDs qualify for 80C. RDs do not.
You are a beginner with ₹500–₹2,000 to spare monthly	RD ✓	Low minimum, easy to start, builds the habit of saving.

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Section 07

7 RD vs FD for Salaried Person — Which Wins?

If you are a salaried person in India, this section is specifically for you.

🏦 Choose FD If You Are...

• ●A salaried person who just received an annual bonus and wants to park it safely
• ●Someone who received a maturity payout from another investment
• ●Looking for a tax-saving investment under Section 80C (5-year FD)
• ●Saving for a short-term goal (6–12 months) with existing savings
• ●A senior citizen wanting maximum safe returns (extra 0.50% rate)

📅 Choose RD If You Are...

• ●A salaried person who wants to save from monthly salary in a disciplined way
• ●A fresher or junior employee building their first savings habit
• ●Saving for a specific goal — phone, laptop, holiday, wedding contribution
• ●Someone who cannot commit a large lump sum upfront
• ●A student or part-time earner with ₹500–₹2,000 to spare each month

💚 Best strategy for a salaried person: Open an RD with your monthly surplus savings (even ₹2,000–₹5,000/month). When the RD matures, take the lump sum and put it into an FD for better returns. RD to build wealth month by month, FD to grow it once you have a corpus.

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Section 08

8 FD vs RD — Which is Better for Beginners?

The clear, simple answer: start with RD. Here is why:

• ●Low starting amount — most banks let you open an RD with just ₹100–₹500 per month
• ●Builds saving habit — you commit to saving every month, which is the most important financial skill to develop early
• ●No upfront lump sum needed — beginners rarely have ₹50,000+ sitting idle to put into an FD
• ●Guaranteed returns — unlike mutual funds or stocks, RD gives a fixed, predictable maturity amount with zero market risk
• ●DICGC insured — up to ₹5 lakh per bank, your money is completely safe

🎯 Beginner's Action Plan

Step 1: Open an RD with ₹1,000–₹2,000/month at your bank or post office. Step 2: Keep saving for 1–2 years. Step 3: When the RD matures, take that lump sum and open an FD for higher returns. Step 4: Start a fresh RD to keep building. Rinse and repeat.

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Section 09

9 Tax on FD and RD Interest — What You Need to Know

Tax Rule	Fixed Deposit (FD)	Recurring Deposit (RD)
Interest is taxable?	Yes — added to income	Yes — added to income
Tax rate	As per income tax slab	As per income tax slab
TDS deducted by bank?	Yes — if interest exceeds ₹40,000/yr (₹50,000 for seniors)	Yes — if interest exceeds ₹40,000/yr
Can TDS be avoided?	Submit Form 15G (non-senior) or 15H (senior) if income below taxable limit	Submit Form 15G/15H
80C tax benefit	Yes — only on 5-year Tax Saver FD (up to ₹1.5L)	No 80C benefit

⚠️ Important: TDS is deducted at 10% if your PAN is linked. Without PAN, TDS is deducted at 20%. Always link your PAN to your bank account and submit Form 15G/15H if applicable.

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Section 10 · How To Guide

10 How to Open FD or RD Online in India — 5 Simple Steps

You can open an FD or RD online in under 5 minutes through your bank's app or net banking. Here's exactly how:

1

Login to Net Banking or Mobile App

Open your bank's official mobile app or visit the net banking portal. Log in using your registered credentials (User ID + Password or MPIN).

2

Select Deposit Type

Navigate to the Investments or Deposits section. Choose Open Fixed Deposit or Open Recurring Deposit based on what you need.

3

Enter Amount and Tenure

Input the amount you want to deposit and select the tenure. The app will show you the current interest rate and estimated maturity amount.

4

Add Nominee Details

Add a nominee for your deposit — always nominate a family member. You can usually select from your existing account nominees.

5

Confirm and Authenticate

Review the details carefully and confirm using your OTP or transaction PIN. Your FD/RD receipt is generated instantly — save it or screenshot it.

💡 Pro Tip

For RD, set up an auto-debit from your salary account on your salary date. The monthly instalment will be paid automatically before you spend the money — this is how you never miss an instalment.

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Section 11

11 Are There Better Alternatives to FD and RD?

FD and RD are safe and predictable — but the interest is fully taxable and returns (6.5–7.5%) barely beat inflation after tax. Here's how they compare to other popular options:

Option	Returns	Risk	Tax Benefit	Liquidity
Bank FD	6.5–7.5%	None	80C (5-yr only)	Moderate
Bank RD	6.5–7.5%	None	None	Moderate
PPF	7.1%	None	80C + EEE	Low (15-yr lock)
NSC (Post Office)	7.7%	None	80C benefit	Low (5-yr lock)
Debt Mutual Fund	6–8%	Low	No	High (T+1)
Liquid Mutual Fund	5.5–6.5%	Very Low	No	Same day
Equity SIP (NIFTY 50)	10–13%*	Market risk	80C (ELSS)	High

🔵 Smart combination: Use FD/RD for short-term goals under 3 years where safety matters most. Use PPF or ELSS SIP for long-term goals (5+ years) where you want higher returns with tax benefits. Never keep all your savings in just one instrument.

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Final Verdict

🏆 Our Verdict — FD vs RD

Choose FD When You Have a Lump Sum. Choose RD When You Save Monthly.

There is no universal winner between FD and RD. FD gives higher interest because your full amount earns from day one — but it requires a lump sum ready. RD is perfect for monthly savers — it builds saving discipline, requires no upfront capital, and is ideal for salaried individuals and beginners.

The real answer for most Indians is: use both. Start an RD with your monthly savings. When it matures, roll the corpus into an FD. Repeat. This way you get the discipline benefit of RD and the higher returns of FD — at the same time.

And if you can take slightly more risk for significantly higher returns — consider adding an SIP in a NIFTY 50 index fund alongside your FD/RD. Over 10+ years, the difference in wealth is enormous.

Ready to Start Saving? Open an RD This Week

You can open an RD online in under 5 minutes through your bank's app or net banking. Start with whatever you can — even ₹500/month. The habit of saving matters more than the amount. 💰

Found this helpful? Share it with a friend who can't decide between FD and RD. Sometimes all it takes is one clear explanation. 😊

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Frequently Asked Questions

FD vs RD — Common Questions Answered

Which gives more return — FD or RD?+

FD gives more return than RD when the same total amount is compared. In an FD, your full principal earns interest from day one. In an RD, each monthly instalment earns interest only from when it was deposited — so on average, your money earns interest for only half the total duration. At the same 7% rate over 12 months, FD earns ₹8,613 while RD earns only ₹4,550 on the same ₹1.2 lakh. FD wins by ₹4,063.

Is RD better than FD for a salaried person?+

For a salaried person who wants to save from monthly income, RD is the more practical choice because it does not require a large upfront deposit. You invest a small fixed amount every month — just like an EMI but in reverse. However, if a salaried person receives an annual bonus or has accumulated savings sitting idle, putting that lump sum into an FD will always give better returns.

Can I open both FD and RD at the same time?+

Absolutely — and this is actually a great strategy. Open an RD to save from your monthly salary. When it matures, take the lump sum and open an FD for better returns. Meanwhile, start a fresh RD. This lets you use the discipline of RD to build savings and the higher returns of FD to grow them. Most banks allow multiple FDs and RDs simultaneously with no limit.

Is FD or RD interest taxable in India?+

Yes — interest earned on both FD and RD is fully taxable in India. It is added to your total income and taxed at your applicable income tax slab rate. Banks deduct TDS at 10% if your total FD/RD interest in a financial year exceeds ₹40,000 (₹50,000 for senior citizens). Submit Form 15G (or 15H for seniors) to avoid TDS deduction if your income is below the taxable limit. Only 5-year Tax Saver FDs qualify for deduction under Section 80C.

What happens if I miss an RD instalment?+

If you miss an RD instalment, most banks charge a penalty — typically ₹1–₹2 per ₹100 per month of default. If you miss 3–4 consecutive months, the bank may close your RD prematurely at a reduced interest rate. Always set up an auto-debit from your salary account on your salary date to avoid this.

Is post office RD better than bank RD?+

Post Office RD currently offers 6.70% per annum (compounded quarterly) — slightly lower than many small finance banks but backed directly by the Government of India, making it 100% safe with no insurance cap. Bank RDs offer up to 7.5% but are insured only up to ₹5 lakh per bank via DICGC. For amounts under ₹5 lakh, a small finance bank RD at 7.25–7.5% is a better deal. For larger amounts or maximum safety, Post Office RD is excellent.

Should I choose FD/RD or SIP mutual fund for saving?+

It depends entirely on your goal and time horizon. For goals under 3 years where you cannot afford any loss — FD or RD is the right choice with guaranteed returns and zero market risk. For goals 5 years or more away — a SIP in a NIFTY 50 index fund has historically given 11–14% annual returns vs. 6.5–7.5% from FD/RD. The ideal approach: FD/RD for short-term safety, SIP for long-term wealth creation.

Disclaimer: Interest rates mentioned are indicative and subject to change. Please check your bank's official website for the latest rates before investing. This article is for educational purposes only and does not constitute professional financial advice. Consult a qualified financial advisor for personalised guidance. *Equity returns are historical and not guaranteed.