FD Versus RD;Which is Better?

Banks are to be utilized to save a portion of money instead of lying money in cup-boards, shelves etc as they don’t appreciate money, Infact they reduce the purchasing power of money as years go-by. Banks offer various small saving schemes to cultivate saving habit among the Public.

Among the small saving instruments offered by the banks, Fixed Deposit(FD) and Recurring Deposit(RD) are very popular. They can be opened with minimal 1000rs(For FD’S)and 500 rupees for RD’s.

Difference Between FD and RD-

Fixed deposit is a popular instrument which allows the saver to invest lumpsum; as per his/her capability where as Recurring Deposit is to save a fixed amount “Monthly” on a particular date for a fixed tenure.

Interest Rate Applicability-

Though Interest Rates vary between bank-to-bank and are subject to change frequently, we are not enclosing interest rates (it may vary in future and bank-to-bank).

In General, The Rate applicable to FD and RD in banks would be same.

But the only fact is that FD offers higher maturity value because amount is invested in lumpsum. The interest rate applicable would be for the entire tenure

Where as in RD, you invest small amounts periodically and the maturity calculated would be less than the previous month. For Example- If you invest 1000rs for 1 year tenure in RD. The interest calculated is for the 1st month and from the 2nd month interest rate is calculated for that month only. Hence FD offers higher maturity value than RD.

FD vs RD- For whom it is beneficial-

Fixed Deposit is beneficial for those who have lumpsum money and invest at one-go

Recurring Deposit is beneficial for those who have small, tiny amounts and can invest periodically.

Both has their Pro’s and Con’s. Choose one as per your capability and develop self saving habit and make your life happy through your savings.

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