FD vs RD: Which One Should You Choose? | Mahindra Finance

Fixed Deposit(FD) and Recurring Deposit (RD) are the two most common investment options in India. They both provide the benefit of steady returns with negligible risk and can hence be a fixed source of income for you.

However, the two are often confused. It is vital to understand the difference between FD and RD to align your financial goals and get the best returns. Read on to learn about the main differences between FD and RD. 

What are FD and RD?

In the case of a Fixed Deposit, the customer picks a fixed tenure that ranges from one week to 10 years. They will need to invest a lump sum, and interest is received on a monthly or quarterly basis. In a Recurring Deposit, customers get to deposit an amount every month that earns interest at the time of maturity.

Key differences between FD and RD


Fixed Deposit

Recurring Deposit


Tenure ranges from 7 days to 10 years.

Tenure ranges from 6 months to over 10 years.

Limit of investment

No maximum limit; starting price is Rs 100.

No maximum limit; the minimum amount differs from provider to provider.

Return rate

Varies, but a ballpark figure is 6%-8%.

Typically 5%-8% for a period of one year, though this can vary according to the provider.

Tax benefit

Available as per the Income Tax Act.

No exemption. However, the amount earned up to Rs 10,000 is exempt from tax.

Auto renewal option


Not available

Penalty for delayed payment

Not applicable

There is a penalty for any delay in an instalment payment.



Why not open an FD and RD with Mahindra Finance today and enjoy hassle-free investments and payouts? To learn more about the difference between Fixed Deposit and Recurring Deposit or the varying FD and RD interest rates, visit our website.

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