Types of fixed deposits
Term Deposit — Meaning, Types & Features
What a term deposit is, how it differs from a demand deposit, and the main types — fixed, recurring, callable, non-callable, cumulative and payout.
Updated 30 September 2026 · 25 banks trackedHighest FD rate now
7.45%
Bandhan Bank · 2 – <3 yearsWhat you need to know
A term deposit is money placed with a bank for a fixed period at an agreed rate. Fixed deposits and recurring deposits are both term deposits, unlike savings and current accounts (demand deposits) that can be withdrawn any time.
Types of term deposits
| Type | How it works |
|---|---|
| Fixed deposit | One-time lump sum for 7 days – 10 years |
| Recurring deposit | Fixed monthly instalment for 6 months – 10 years |
| Cumulative | Interest compounded quarterly and paid at maturity |
| Non-cumulative | Interest paid monthly, quarterly, half-yearly or yearly |
| Callable | Can be withdrawn before maturity with a penalty |
| Non-callable | No premature withdrawal; allowed for deposits of ₹1 crore and above (RBI, Oct 2023) and may earn a slightly higher rate |
| Flexi / sweep-in | Linked to savings account; breaks automatically when needed |
| Tax-saver | 5-year lock-in; 80C / Sec 123 deduction (old regime) |
Term deposit vs demand deposit
| Term deposit | Demand deposit | |
|---|---|---|
| Withdrawal | On maturity (or with penalty) | Any time |
| Interest | Higher, fixed for tenure | Lower, variable |
| Examples | FD, RD | Savings, current account |
Frequently asked questions
Is a term deposit the same as an FD?
An FD is the most common term deposit; RDs are also term deposits.
Information is for education and comparison. Rates and rules change — confirm with your bank and a tax adviser before investing. FinancePortal is not a financial or tax adviser.