RD vs FD Calculator
Compare Recurring Deposit (RD) and Fixed Deposit (FD) returns side-by-side with true capital parity. Analyze quarterly compounded maturity values, interest differences, and tax implications.
Investment Parameters
Head-to-Head Comparison
Annual Growth & Accumulation Schedule
| Year | FD Balance | FD Cumulative Interest | RD Cumulative Outlay | RD Balance | RD Cumulative Interest |
|---|
RD vs. FD: Understanding the Compounding Mechanics
Both Fixed Deposits (FD) and Recurring Deposits (RD) are guaranteed, sovereign/bank-backed savings instruments offering pre-determined returns. While commercial banks and post offices typically quote identical annual interest rates for both products, their actual maturity values differ significantly due to the timing of capital deployment.
MFD = P × (1 + R / 4)4 × (t / 12)
2. Recurring Deposit (Monthly Stream Compounding):
MRD = ∑ [ Pmonthly × (1 + R / 4)4 × (n – i + 1) / 12 ]
Where: R is the nominal annual rate, t or n is tenure in months, and i represents each individual deposit installment.
Why FDs Earn Nearly Double the Interest of RDs for the Same Capital
If you commit 120,000 over 12 months at 7.5% interest, an FD will generate approximately 9,260 in interest, whereas an RD will generate approximately 4,980. This gap occurs because:
- In an FD: The entire 120,000 compounds from Day 1 for the full 365 days.
- In an RD: You invest 10,000 per month. The first 10,000 earns 12 months of interest, but the 6th month deposit earns only 7 months, and the final deposit earns only 1 month of interest.
- The Takeaway: An RD should not be evaluated as an alternative to an existing lump sum; rather, it is a disciplined savings mechanism for future salary income.
Comprehensive Head-to-Head Comparison: RD vs. FD
| Feature | Fixed Deposit (FD) | Recurring Deposit (RD) |
|---|---|---|
| Investment Method | One-time upfront lump sum. | Fixed regular monthly installments. |
| Ideal For | Individuals with existing capital (bonuses, sales, windfalls). | Salaried individuals saving monthly from cash flow. |
| Compounding Frequency | Quarterly compounding (standard banking). | Quarterly compounding (standard banking). |
| Minimum Tenure | 7 days up to 10 years. | 6 months up to 10 years. |
| Taxation & TDS | Taxable at income tax slab (TDS applies > 40,000). | Taxable at income tax slab (TDS applies > 40,000). |
| Premature Liquidity | Permitted with 0.5% – 1.0% interest rate penalty. | Permitted with 0.5% – 1.0% interest rate penalty. |
Explore More Financial Planning Calculators on 5iTech
Coordinate your complete wealth accumulation strategy with our specialized tool suite:
Frequently Asked Questions
In a Fixed Deposit, 100% of your capital begins earning compound interest from Day 1 for the entire tenure. In a Recurring Deposit, your money enters in monthly installments; only your first installment earns interest for the full duration, while subsequent installments earn interest for progressively shorter periods.
Yes, most commercial banks and post offices offer a preferential interest rate premium of 0.50% to 0.75% per annum for depositors aged 60 and above on both Recurring Deposits and Fixed Deposits.
There is no difference in tax treatment between RDs and FDs. Interest earned on both instruments is added to your total income and taxed at your marginal income tax slab. Banks deduct 10% TDS if total deposit interest exceeds 40,000 (50,000 for senior citizens) in a financial year.
An FD is mathematically superior if you have a lump sum available immediately because it maximizes compounding time. An RD is superior for salaried individuals who want to invest disciplined monthly amounts from regular income without needing a large upfront corpus.
Banking Standards & Actuarial Precision
Calculations follow the Indian Banks’ Association (IBA) quarterly compounding framework. Annual growth schedules and interest accruals are mathematically verified.
Disclaimer: This calculation tool is provided for educational and self-directed financial evaluation purposes only. Final maturity proceeds and exact quarterly compounding intervals may vary slightly depending on individual bank terms and leap year day-counts. Verify with your financial institution prior to account opening.