November 23, 2025 · 9 mins read
Santosh Kumar
When it comes to investment, modern digital world gives us a variety of options. These include high risk options as well as low risk options. Low risk options like fixed deposit and recurring deposit give us assured guaranteed results, making them increasingly popular in recent times. All these investment options have become easily accessible to the common people, thanks to the digital transformation.
Fixed deposit, as the name suggests, allows us to deposit a lump sum amount in a financial institution over a period of time, with a rate of interest specified by the bank. It is one of the most trusted and fastest ways of investment when an investor has a lump sum amount to invest. Fixed deposits can be started from an amount as low as Rs. 5000, and there is no upper limit to the amount that we can keep as a fixed deposit. Upon maturity, the principal amount along with the accrued interest can be reinvested into a new fixed deposit, thus maximizing our returns.
Recurring deposits, on the other hand, allow investors to invest small but equal amounts in a regular, recurring fashion, mostly monthly. Upon completion of the tenure, the principal amount as well as the interest accumulated over the tenure period can be withdrawn completely.
Recurring deposits are thus disciplined ways of growing our money in a slow but steady manner. With both options available, investors may have questions regarding which is better, fixed deposit vs recurring deposit.
A fixed deposit is primarily for those who have a good amount and prefer to invest it rather than letting the money stay idle in their banks. Recurring deposits are savings for those who do not have a large amount to invest but are willing to contribute regularly to build a lump sum amount in the future.
Fixed deposits and recurring deposits are the ideal saving choices for the not-so-modern, conservative investors who prefer low risk investments with assured higher returns.
1: Some banks may have more or less equal interest rates for both fixed deposits and recurring deposits.
2: The interests earned on both fixed deposits and recurring deposits are taxable.
3: Investors can opt for loans against their fixed deposits and recurring deposits without having to actually break their investments and thereby avoid any premature withdrawal charges.
4: All banks give us the option of opening fixed deposits and recurring deposits in online mode.
Alternatively, one can visit their nearest bank branch and get additional details on fixed deposit vs recurring deposit.
5: For both fixed deposits and recurrent deposits, the higher the tenure, the higher the rate of interest in most banks.
6: There is no upper or lower age limit to open fixed deposits and recurring deposits in India. For minors (below 18 years), a guardian must open the account. In fact, senior citizens (above 60 years) and super senior citizens (above 80 years) enjoy higher interest rates and other benefits.
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Though both fixed deposits and recurring deposits are traditional time-tested methods of investment, the choice of whether to opt for a fixed deposit or a recurring deposit depends entirely on the current financial situation of the investor and the different financial needs of the customer. Some of the differences between fixed deposit vs recurring deposit are:
1: While fixed deposit is a one-time lump sum payment, recurring deposits are equated to small monthly payments.
2: Fixed deposits’ tenure ranges from as low as seven days to as long as 10 years. For recurring deposits, the minimum tenure is at least six months from the start.
3: The interest rates for fixed deposits are comparatively higher as interest accumulates from day one, while for recurring deposits, interests are calculated on a monthly basis, and hence interest rates are relatively lower.
4: Most banks allow for premature withdrawal of fixed deposits with nominal fees and reduced interest rates. This may not be the case for recurring deposits, as some banks do not allow for premature withdrawal of recurring deposits.
5: The minimum amount to start a fixed deposit in a bank is Rs 5000; the minimum amount to start a recurring deposit in a bank is as little as Rs. 100.
6: Fixed deposits also can be reinvested as new fixed deposits once they mature, thereby giving even higher returns due to the compounding effects. Recurring deposits upon maturity, however, cannot be reinvested as a new recurring deposit. It can, however, be invested as a new fixed deposit.
7: Fixed deposits also give us the option of earning interest payments on a monthly, quarterly, or yearly basis. Fixed deposit interests can also be cumulated to get higher returns at maturity.
One more advantage for investors who have a lump sum to invest and are planning on investing in a fixed deposit is they can apply for a ZET credit card with SBM bank. This applies as well for those investors who do not have prior experience using credit cards but want to increase their credit scores and creditworthiness. The ZET credit card is the first of its kind FD backed credit card, as it does not require any income proofs or CIBIL scores. Individuals can apply for this lifetime free ZET credit card by opening a fixed deposit with an amount as minimum as Rs. 5000. The credit limit is auto set at 90% of the fixed deposit amount. ZET credit cards give us the dual benefit of owning a credit card as well as growing money with interest accrued on our fixed deposits. Depending on one’s financial situation, they can top up the fixed deposit amounts to higher amounts, which in turn automatically increases the credit limits.
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Different individuals have different financial goals, depending on their income, age, eligibility criteria and liabilities. Before investing, it is better to decide which suits us the best. The best options are usually the ones with higher interest rates than others. Investors can speak directly to their bank’s customer care representatives. Many banks have online calculators, which help them compare the different fixed deposit schemes as well as recurrent deposit schemes. These online calculators are easy and convenient to use and time-saving. Investors typically have to put their deposit amount, tenure, and interest rates in these online calculators to get the approximate maturity amount.
As fixed deposits involve a one-time payment, they are ideally suitable for richer class people or retired people who have large funds. Recurrent deposits, on the other hand, cater to the employed section of the society who have regular steady income but want to be financially secure in the future.
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Fixed deposits and recurring deposits are investment options that are not linked to market volatility and so give guaranteed predictable returns. In spite of multiple investment options like equities, SIPs and mutual funds coming up daily, fixed deposits and recurring deposits remain by far the most trusted avenues of investment in our country. According to RBI, fixed deposits remain the top choice of investments for most Indians, accounting for an estimated 50% of total savings. One may wonder which is better, fixed deposit vs recurring deposit. There is no definite answer to it, as it entirely depends on the current financial situation and future financial goals of the investor. Fixed deposits are for those who have a lump sum to deposit and wish to invest the amount immediately, and recurring deposits are for those who prefer financial discipline and are financially ready to contribute a fixed amount at regular intervals.
As interest on fixed deposits is calculated from day one, fixed deposits often are accompanied by higher interest rates and thus higher returns compared to recurring deposits. Recurring deposits are meant for corpus accumulation of wealth for long term goals like education, marriage, etc. Hence, it is advisable to include both fixed deposits and recurring deposits in our financial journey and reap the benefits of both.
Savings accounts, fixed deposits, and recurrent deposits are some of the low risk investment options in today’s world. They are considered low risk, as they are not related to market fluctuations and offer higher guaranteed returns.
Yes, if one’s financial situation permits, it is always advisable to have both fixed deposits and recurring deposits to have a strong financial future.
Yes, most banks allow premature withdrawal of fixed deposits with penalty charges and lower interest rates.
No, fixed deposits and recurrent deposits have different rates of interest. The rates of interest vary from bank to bank. There are additional benefits for women, senior citizens, and super senior citizens.
Fixed deposits require a minimum of Rs. 5000 to be deposited for a tenure of a minimum of seven days. For recurring deposits the minimum amount to be deposited is Rs. 100 for a period of minimum 6 months.
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