FD vs RD Calculator: Compare Returns & Interest (2026)
The FD vs RD Calculator is a smart decision-making tool that helps you choose between a Fixed Deposit (FD) and a Recurring Deposit (RD).
Should you invest a lump sum today, or save small amounts every month? This tool compares both scenarios side-by-side using the same tenure and interest rate, showing you exactly which option creates more wealth.
How to Use FD vs RD Calculator
We have designed this calculator with a unique “Equal Investment” feature to give you a fair comparison.
- Enter Common Details: Set your Investment Period (e.g., 3 years) and the Interest Rate offered by your bank.
- Enter RD Amount: Input how much you can save monthly (e.g., ₹5,000).
- The “Equal Investment” Toggle:
- Unchecked (Default): Compare a specific FD amount vs a specific RD amount.
- Checked (Recommended): The tool automatically calculates the FD amount needed to match your total RD investment.
- Example: If you invest ₹5,000/month for 1 year (Total ₹60,000), the tool will compare it against a one-time FD of ₹60,000.
- Analyze the Insight Box: Look at the colored box below the results. It tells you exactly which option wins and by how much.
FD vs RD: What is the Difference?
Both schemes are secure, government-regulated investment options offered by banks and Post Offices in India. However, they work on different principles:
- Fixed Deposit (FD): You deposit a lump sum amount once at the beginning. The bank pays interest on the entire amount for the full tenure.
- Recurring Deposit (RD): You deposit a fixed amount every month. You earn interest on the first installment for 12 months, the second for 11 months, and so on.
Quick Comparison Table
| Feature | Fixed Deposit (FD) | Recurring Deposit (RD) |
| Investment Style | One-time Lump Sum | Monthly Installments |
| Who is it for? | People with idle cash / Retirees | Salaried employees / Students |
| Interest Calculation | On full amount from Day 1 | On each installment individually |
| Penalty | For premature withdrawal | For missing a monthly payment |
| Minimum Amount | Usually ₹1,000+ | As low as ₹100/month |
The Golden Rule: Why FD Usually “Wins” Mathematically
If you use our calculator with the “Equal Investment” toggle turned on, you will notice that FD almost always generates higher returns than RD.
Why?
It is due to the Time Value of Money.
- In an FD of ₹1 Lakh, the entire ₹1 Lakh earns interest for the full year.
- In an RD of ₹1 Lakh (split into months), only the first installment earns interest for the full year. The last installment earns interest for only 1 month.
Does this mean RD is bad?
Not at all. RD is not about beating FD returns; it is about affordability. Most people do not have ₹1 Lakh ready today (FD), but they can easily spare ₹8,000 a month (RD).
The Math: How Interest is Calculated
Since we are avoiding complex academic notations, here is the simplified logic used by banks to calculate your returns:
1. Fixed Deposit Formula
Your money grows using standard compound interest.
Maturity = P × (1 + r/n)^(nt)
- P = Principal (Lump sum)
- r = Interest Rate
- n = Compounding Frequency (usually 4 for Quarterly)
2. Recurring Deposit Formula
The bank treats every monthly installment as a separate mini-FD. The formula sums up the interest from every individual payment.
Maturity = Sum of [ P × (1 + r/n)^(nt) ] for every installment
Note: In India, most banks compound interest quarterly for both FD and RD.
Tax Implications (2025 Update)
When choosing between FD and RD, remember that the tax treatment is identical for both.
- TDS (Tax Deducted at Source): Banks deduct 10% TDS if your interest income from FD/RD exceeds ₹40,000 in a financial year (₹50,000 for Senior Citizens).
- Income Tax: The interest you earn is added to your total annual income and taxed according to your slab. If you are in the 30% slab, you pay 30% tax on the interest from both FD and RD.
Frequently Asked Questions (FAQs)
If you have the full amount available today, FD gives better returns because the money compounds for a longer time. If you are building savings from your salary, RD is the better choice.
No. In a standard RD, the amount is fixed. If you want flexibility to deposit varying amounts, look for “Flexi-RD” schemes offered by some banks like SBI or ICICI.
RD interest is fully taxable just like FD interest. There is no tax benefit under Section 80C for normal RDs (only for 5-Year Tax Saver FDs).
The bank may charge a penalty (usually ₹1 to ₹2 per ₹100) and might discontinue the account if multiple installments are missed.
Yes, but banks usually charge a penalty of 0.5% to 1% on the interest rate. The interest paid will be applicable for the period the deposit actually ran, minus the penalty.