FD vs RD Calculator — Compare Returns

Total Investment Amount

₹

₹5,000₹50,00,000

Interest Rate

% p.a.

115

Tenure

months

3120

More interest

Fixed Deposit

Full amount upfront

₹0

Principal₹1.00 L

Interest₹0

Rate7% p.a.

Recurring Deposit

₹8,333/month

₹0

Principal₹1.00 L

Interest₹0

Rate7% p.a.

Both use quarterly compounding. RD monthly deposit = principal ÷ tenure.

What is a FD vs RD?

An FD vs RD Calculator compares the maturity amount and interest earned when the same total money is placed in a Fixed Deposit versus a Recurring Deposit at the same interest rate and for the same period. The comparison isolates the single variable that drives the difference: when your money is deployed. FD places the full principal on day one; RD spreads it monthly.

This distinction matters because the two products serve completely different use cases in Indian banking. An FD suits someone who already has a surplus — a bonus, an inheritance, proceeds from a property sale — and wants to park it safely for a fixed period. An RD suits someone who does not have that surplus yet but wants to save a fixed amount every month. Understanding the interest difference between these two structures, on the same total capital, helps you make the right choice when both options are genuinely available to you.

Both FD and RD use quarterly compounding in India, as mandated by the Reserve Bank of India's guidelines. This is an important nuance: FD interest is not calculated as simple interest on the principal. Each quarter's interest is added to the principal, and the next quarter earns interest on the new total. This compounding effect, applied to the full FD principal from day one, is precisely why FD always beats RD at the same rate.

For investors comparing these products to market-linked alternatives, the SIP vs RD Calculator allows you to compare a monthly mutual fund SIP against an RD, while the Fixed Deposit Calculator models FD maturity with payout options (monthly, quarterly, or at maturity) in detail.

How to use this FD vs RD calculator

Enter your Total Investment Amount — the full principal you plan to invest, regardless of whether you are leaning towards FD or RD. For FD, this entire amount is deployed immediately. For RD, the calculator divides this by the tenure in months to compute the monthly instalment. A common amount is ₹1,00,000 (₹1 lakh).
Set the Interest Rate — enter the interest rate your bank currently offers for the chosen tenure. Check your bank's website or FD rate card for the exact rate. Most banks offer slightly different rates for different tenure brackets (e.g., 7.1% for 1 year but 7% for 2 years). Use the same rate for both instruments — the purpose is to isolate the timing effect, not a rate difference.
Adjust the Tenure — set the investment period in months. A 12-month tenure gives a fair short-term comparison; 60 months (5 years) shows how the FD Advantage behaves over a longer period. Note that tenure in this calculator is in months, so a 2-year comparison requires entering 24.
Read the maturity amounts — compare FD Maturity Amount and RD Maturity Amount in the results. The bar chart makes the gap immediately visible. The FD Maturity is always higher; the question is whether the margin justifies choosing FD over RD given your cash-flow situation.
Evaluate the FD Advantage — if this number is significant relative to the total interest earned, and you already have the full principal available, an FD is the clearly superior choice. If the advantage is small (short tenure, low rate) and you need monthly liquidity, an RD may be the better practical option.

Formula & Methodology

FD Maturity — Quarterly Compounding on Full Principal:

FD_Maturity = P × (1 + r/4)^(4 × t)

Where:
- P = total principal (₹)
- r = annual interest rate ÷ 100
- t = tenure in years (= months ÷ 12)

RD Maturity — Sum of Quarterly-Compounded Monthly Instalments:

RD_Maturity = Σ (P/n) × (1 + r/4)^(4 × k/12) for k = 1 to n

Where:
- P/n = monthly instalment = total principal ÷ tenure in months
- r = annual interest rate ÷ 100
- k = months remaining for each instalment (n − instalment number + 1)
- n = total number of monthly instalments (= tenure in months)

Worked example — ₹1,00,000 at 7% p.a. for 12 months:

- Monthly RD instalment = ₹1,00,000 ÷ 12 = ₹8,333.33
- FD Maturity = 1,00,000 × (1 + 0.07/4)⁴ = 1,00,000 × 1.071859 ≈ ₹1,07,186
- RD Maturity = Σ 8,333.33 × (1.0175)^(4 × k/12) for k = 1 to 12 ≈ ₹1,04,604
- FD Interest = ₹7,186 | RD Interest = ₹4,604 | FD Advantage = ₹2,582

Key assumptions:
- Both instruments use quarterly compounding (as per RBI guidelines for Indian banks)
- FD modelled as cumulative (interest reinvested, not paid out monthly)
- RD instalment = total principal ÷ tenure; actual bank RDs require a fixed monthly amount, not a derived fraction
- No TDS, penalty, or premature withdrawal modelled
- Interest rate is assumed constant for the full tenure (no step-up or floating rate)

For detailed FD planning with monthly interest payout, non-cumulative options, and different compounding frequencies, use the Recurring Deposit Calculator for the RD side and the Fixed Deposit Calculator for the FD side separately.

Frequently Asked Questions

What is the difference between FD and RD?

A Fixed Deposit (FD) requires you to invest the entire amount in one go at the start, after which the bank pays interest on the full principal for the entire tenure. A Recurring Deposit (RD) lets you invest a fixed amount every month, so only the first instalment works for the full tenure while later instalments work for progressively shorter periods. Both use quarterly compounding in India and both are equally safe products guaranteed by DICGC up to ₹5 lakh per depositor per bank.

Why does FD earn more interest than RD at the same rate?

With an FD, your entire principal is deployed from day one, so every rupee compounds for the full tenure. With an RD, the first monthly instalment gets the full period while the last instalment gets only one month. Because a large portion of the RD principal arrives late, it has less time to compound — resulting in lower total interest even though the rate is identical. The FD Advantage narrows as the tenure increases because more instalments get near-full compounding.

How does the FD vs RD Calculator work?

The calculator takes your Total Investment Amount and splits it two ways. For FD, it compounds the full amount for the chosen tenure at the entered interest rate (quarterly compounding). For RD, it divides the same total by the number of months to get the monthly instalment, then compounds each instalment for its remaining months. The FD Maturity and RD Maturity are shown side by side, and FD Advantage is the difference between them.

Which is better — FD or RD?

If you already have the lump sum available, an FD will always yield more interest than an RD on the same amount at the same rate. However, if you do not have the full amount upfront, an RD is far better than keeping cash idle — it allows disciplined monthly saving while earning bank interest. For many salaried investors the real-world choice is not FD versus RD, but rather whether to use an available surplus for FD or invest it in an equity mutual fund via a lumpsum or SIP.

What is the current FD interest rate offered by banks in India?

As of 2025, nationalised banks such as SBI offer FD rates of 6.8–7.1% p.a. for 1–3 year tenures, while private sector banks like HDFC Bank and ICICI Bank offer 7–7.5%. Small finance banks frequently offer 8–9% p.a. Senior citizens receive an additional 0.25–0.5% p.a. on most bank FDs. The default rate of 7% p.a. in this calculator reflects a typical large bank's standard rate for a 1-year term deposit.

How is FD interest calculated in India?

Indian banks use quarterly compounding for cumulative FDs. The formula is: Maturity Amount = P × (1 + r/4)^(4 × t), where P is the principal, r is the annual rate as a decimal, and t is the tenure in years. For example, ₹1,00,000 at 7% p.a. for 1 year gives: 1,00,000 × (1 + 0.07/4)^4 = 1,00,000 × 1.07186 ≈ ₹1,07,186. The interest earned is ₹7,186 — slightly more than simple interest because of quarterly rests.

How is RD interest calculated in Indian banks?

Each monthly RD instalment is treated as a separate deposit compounded quarterly for its remaining duration. The maturity amount is the sum of all instalment future values: Σ P × (1 + r/4)^(4 × k/12) where k is the months remaining for each instalment. For a 12-month RD of ₹8,333/month at 7%, the first instalment compounds for 12 months and the last for 1 month. The total RD maturity is slightly less than the FD maturity on the same total principal.

Is FD or RD better for tax saving?

Neither standard FD nor RD provides tax deduction — only a 5-year Tax Saver FD under Section 80C qualifies for deduction up to ₹1.5 lakh per financial year. Interest earned on both standard FDs and RDs is taxable as income from other sources at your applicable slab rate, and TDS is deducted if interest exceeds ₹40,000 per year (₹50,000 for senior citizens). A 5-year Tax Saver FD does not allow premature withdrawal, unlike a standard FD.

What TDS is deducted on FD and RD interest in India?

Banks deduct TDS at 10% when total interest from deposits at a single bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If you have not submitted your PAN, TDS is deducted at 20%. You can submit Form 15G (non-senior citizens) or Form 15H (senior citizens) at the start of a financial year to avoid TDS deduction if your total income is below the taxable limit. TDS deducted is creditable against your final income tax liability.

Can I break an FD or RD before maturity?

Most bank FDs can be prematurely withdrawn with a penalty of 0.5–1% reduction in interest rate — you receive the contracted interest minus the penalty. RDs can generally be closed prematurely too, but some banks impose a penalty on the interest earned. A 5-year Tax Saver FD cannot be broken before the lock-in period ends. Always check your bank's specific terms before booking, especially if the funds may be needed before maturity.

What is the minimum deposit amount for FD and RD in India?

The minimum FD amount at most public sector banks is ₹1,000, while some private banks require ₹5,000 or more. For RDs, most banks allow monthly instalments starting from ₹100, with some requiring ₹500 as the minimum instalment. Small finance banks and co-operative banks may have their own minimums. There is no maximum limit on FD or RD deposits, though DICGC insurance covers only up to ₹5 lakh per depositor per bank.

Should I choose FD or SIP for a 5-year investment goal?

For a goal exactly 5 years away, both are viable. An FD at 7% p.a. guarantees a specific maturity amount with zero risk. A monthly SIP in an equity mutual fund at 12% p.a. (long-run historical average) would generate roughly 1.7 times the FD corpus on the same total investment, but with the possibility of lower returns in a bear market. Your risk tolerance, the importance of the goal, and whether you have a lump sum or only monthly savings should guide the choice. Compare both scenarios using our [SIP vs RD Calculator](/sip-vs-rd-calculator/).