Fixed Deposit (FD) and Recurring Deposit (RD) are both popular savings options offered by banks and financial institutions in which you earn interest on your deposits. However, they differ in terms of deposit structure, flexibility, and usage.

Here is a detailed comparison:

1. Deposit Structure

Fixed Deposit (FD):

A lump sum amount is deposited at once for a fixed tenure.

The amount remains locked in until maturity.

Recurring Deposit (RD):

A fixed amount is deposited at regular intervals (monthly or quarterly).

Suitable for those who wish to save gradually.

2. Tenure

FD: Generally ranges from 7 days to 10 years, depending on the institution.

RD: Typically ranges from 6 months to 10 years.

3. Interest Rate

FD: Generally offers slightly higher interest rates compared to RD.

RD: Offers competitive rates but usually slightly lower than FD.

4. Investment Frequency

FD: One-time investment.

RD: Regular periodic investments over the tenure.

5. Withdrawals

FD : Premature withdrawal is possible but usually comes with a penalty.

Some banks also offer partial withdrawal options.

RD : Premature closure is possible, but a penalty may apply, and interest will be calculated accordingly.

6. Interest Payout

FD : Interest can be change periodically (monthly/quarterly/yearly) or at the time of maturity.

RD : Interest is compounded quarterly and paid along with the principal at maturity.

7. Ideal For

FD: Suitable for those with a lump sum amount and looking for stable returns.

RD: Ideal for people who want to cultivate a habit of saving small amounts regularly.

Example:

FD: Deposit ₹1,00,000 at once for 1 year at 7% interest.

RD: Deposit ₹5,000 monthly for 12 months at 6.5% interest.

Both options are secure, and the choice depends on your financial goals and saving habits.

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