Is it possible to withdraw early from a Recurring and a Fixed Deposit account?

Yes, you can prematurely withdraw an FD partially or fully. RD providers allow only one premature withdrawal. However, in both cases, 1% penalty applies.

Are the interest rates for both FDs and RDs the same?

No, the FD interests generally stay higher in most cases. However, you must check with your FD or RD provider for a better comparison.

Is there any FD type that is exempt from applicable taxes in India?

Tax saver fixed deposits are available to save up to ₹1.5 lakh in taxes.

Can I create both the FD and RD accounts at the same time?

Yes, you can open both an FD and an RD account at the same time at the same or different financial institutions.

Is it possible to transfer my FD amount to another account?

Yes, you can transfer your FD from one branch to another. However, the branches must be of the same bank.

Which is Better Between a Term Deposit vs Recurring Deposit?

Subhodip Das

Author Updated on Oct 9, 2025

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As of 2025, 45.1% of Indian investors now hold term deposits worth ₹1 crore, reflecting a strong preference for secure, high-value investments. In comparison, recurring deposits (RDs) offer similar benefits but with the flexibility of affordable monthly contributions.

However, if you are confused between a Term Deposit vs Recurring Deposit, read this blog and invest accordingly.

Quick Synopsis

You can create an FD with a lump sum of at least ₹1000.
You can create an RD account for as low as ₹100.
With an FD, you can earn a monthly payout or withdraw on maturity.
You can withdraw an RD only after its maturity.

Term Deposit vs Recurring Deposit: Key Differences

Take a look at the 4 key differences between Term Deposit vs Recurring Deposit to make an informed investment decision:

Specifics	Term Deposit	Recurring Deposit
Investment nature	To open a Fixed or Term Deposit, you must invest a lump sum amount. Usually, banks allow a minimum investment amount of ₹1000.	Unlike a Term Deposit, you can invest a fixed amount for a fixed tenure every month. You can start an RD with as low as ₹100 per month.
Average investment tenure	Depending on your FD provider’s terms, you can open a Fixed Deposit for as low as 7 days for up to 10 years.	Tenure of RDs might vary across banks, but usually ranges between 6 months and 10 years.
Interest payouts	While opening a Term deposit account, you can choose to withdraw it upon maturity with interest or choose monthly, quarterly or half-yearly interest payouts.	With Recurring Deposits, you only get the option to withdraw the corpus upon its maturity.
Renewals	You can choose auto-renewal for reinvestment.	For RD, you do not have such an option. However, you can withdraw the amount and reinvest it as an FD.
Tax savings	Term deposits or FDs come with a Tax savings option under Section 80C	There is no RD scheme for tax savings.

Return Comparison Between Term Deposit vs Recurring Deposit

Let us compare the return between a Term Deposit vs Recurring Deposit with a simple example:

Suppose you create a Fixed Deposit of ₹36,000 and an RD at ₹1000 per month with an FD provider for 3 years.
Both the applicable fixed deposit and RD interest rates are 7.00%. Please note that both interests are calculated using a quarterly compounding method.
Upon maturity of the term or Fixed Deposit, you will get ₹44,332 in total.
When your RD matures, you will get ₹40,137 in total.

The return comparison clearly shows that with FD, you will get an extra ₹4015 as a return compared to an RD.

With Stable Money, you can open an FD or an RD account and earn up to 8.40%. Download the Stable Money app today and start your investment.

Which One to Choose Between a Term and Recurring Deposit?

Before preferring one between a term deposit vs recurring deposit, you must consider a few factors. These include your investment capacity, tax savings options, or payout preferences:

Tax Savings: If you want to save on income taxes while earning interest, choose a tax-saving fixed deposit. Such fixed deposits have a minimum lock-in period of five years, whereas recurring deposits do not offer this benefit.
Monthly Payouts: If you want a payout at monthly, quarterly or half-yearly intervals, choose a term deposit as RDs do not have this feature.
Affordable Investment: If you do not have a lump sum to start an FD, an RD can be an affordable option. You can maintain a disciplined investment practice with affordable monthly instalments.

Final Word

If you are new to investing, it can be confusing to choose between a term deposit and a recurring deposit. The key difference is that a term deposit requires a lump sum investment, while a recurring deposit involves making monthly instalments. Additionally, there are other differences to consider, such as investment tenure, return amounts, tax advantages, and more.

Download the Stable Money app today to explore a wide range of FD and RD investment options and start building your wealth confidently!

Frequently Asked Questions

About the Author

Subhodip Das

With an experience of 13 years in the field of Digital Marketing, Subhodip Das specialises in Content. Writing and Marketing Strategies. He has worked with well-established organisations and startups helping them achieve increased search engine visibility. An avid researcher on market investment, Subhodip is also a passionate cook and foodie.

Open your FD now with Shivalik Bank for up to 8.5% interest

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Investment amount: ₹1,00,000
Compounding: Quarterly
FD rate applicable: 8%
FD tenure: 2Y 3M
Maturity amount: ₹0
Interest earned: ₹0

Which is Better Between a Term Deposit vs Recurring Deposit?

Term Deposit vs Recurring Deposit: Key Differences

Return Comparison Between Term Deposit vs Recurring Deposit

Which One to Choose Between a Term and Recurring Deposit?

Frequently Asked Questions

Is it possible to withdraw early from a Recurring and a Fixed Deposit account?

Are the interest rates for both FDs and RDs the same?

Is there any FD type that is exempt from applicable taxes in India?

Can I create both the FD and RD accounts at the same time?

Is it possible to transfer my FD amount to another account?

About the Author

Subhodip Das

Disclosure and Compliance

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Disclosure and Compliance

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