Guides
RD vs FD — Which Is Better?
Monthly saving or lump sum? How RD and FD returns compare for the same money, when each makes sense, and a side-by-side calculator.
Updated 30 September 2026Highest RD rate now
7.25%
Bandhan BankWhat you need to know
Both are term deposits with the same rate card at most banks. The difference is timing: an FD invests the whole amount on day one, while an RD invests month by month. So for the same total, an FD earns more — but an RD is the tool for building a sum you do not have yet.
Comparison
| Feature | RD | FD |
|---|---|---|
| How you invest | Fixed amount every month | Lump sum once |
| Tenure | 6 months – 10 years | 7 days – 10 years |
| Interest | Each instalment earns from its date | Whole amount earns from day one |
| Discipline | Forces monthly saving | Needs money upfront |
| Missed payment | Penalty; account may close | Not applicable |
| Loan / premature | Allowed with penalty | Allowed with penalty |
| Tax | Slab rate, TDS above threshold | Same |
Use both together
- Run an RD for a goal 1–3 years away (e.g. a vacation, gadget, school fees).
- When a bonus or RD maturity arrives, move it into an FD.
- Keep an emergency fund in a sweep-in FD, not an RD.
Calculator
Frequently asked questions
Is RD interest lower than FD?
The rate is usually the same; the total interest is lower because money goes in gradually.
For information and comparison only. Confirm rates and rules with your bank or post office.