Fixed Deposit vs Recurring Deposit : Which is the Better Option?

Fixed deposits (FD) and Recurring Deposits (RD) are considered a better option over savings accounts as they generate more returns. Individuals engage their savings in such deposits to earn returns from it after pre-determined intervals of time.

Since the mechanism of one is different from the other, individuals often need to tally FD vs RD to determine which is most suitable for them, considering their requirements.

Fixed deposits and recurring deposits differ on the lines of duration, minimum investment limit, interest rates (also varies from one bank/NBFC to another), withdrawal restrictions on the deposited money, returns, and suitability in terms of the depositor’s financial requirements and investment capability. One thing common between the two is that both come with a pre-determined interest availing period.

Both the Fixed Deposit & Recurring Deposit returns are subject to a 10% TDS if the total interest income earned by an individual in a year exceeds Rs. 10,000. However, if the total annual income of the person is below the taxable limit, he/she has to submit Form 15G or 15H (for senior citizens) to the particular financial institution to avoid TDS deduction. A TDS waiver will automatically raise the returns from the FD.