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5 Steps to Know About the Fixed Deposit vs Recurring Deposit

fixed deposit
Gaurav Khanna

What is a Fixed Deposit?

A fixed deposit is an investment of your savings to earn a higher rate of return than a regular savings account. It is offered by banks and NBFCs (Non-Banking Financial Companies). A fixed deposit has the lowest risk in the portfolio of investment. Money is invested in a fixed deposit with a lock-in period and interest is given either at the end of the maturity date or as a regular payout.

What is a Recurring Deposit?

Like Fixed Deposits, Recurring Deposits are another investment option offered by the banks and are considered a preferred saving option and an alternative to fixed deposits. A recurring deposit is best suited for people who earn a salary or those who have a low annual income. An individual has to deposit a fixed sum from a part of their income every month for a tenure decided by the individual. Once the tenure reaches its maturity, the principal amount is returned to the investor along with the interest earned on the amount. 

The following are the 5 steps to understand Fixed Deposit and Recurring Deposits:

  1. Firstly, Based on Investment amount:

A person who is interested in investing the complete lump sum will invest in a fixed deposit. 

On the other hand, a person who wants to invest periodically will invest in a recurring deposit.

  1. Secondly, the Tenure: 

For a Fixed Deposit, the tenure ranges from 12 months to 5 years 

For a Recurring Deposit, the tenure ranges from 6 months to 10 years for recurring deposits.

  1. Thirdly, Interest Amount: 

The interest amount earned on a Fixed Deposit is generally higher than the interest amount earned on recurring deposits, given the same amount of investment and same tenure.
The interest amount for a recurring deposit is 

  1. Fourthly, Interest:
    The interest rate in a fixed deposit is paid either monthly or annually or at the end of the tenure depending on the depositor.
    The interest in a recurring deposit is paid at the end of the tenure when the amount is matured.
  2. Lastly tax saving option:
    The tax saving option for a Fixed Deposit is available with a 5-year lock-in period.
    The Tax saving option for a Recurring Deposit is not available
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A bank Fixed Deposit is considered a safe investment option with the least amount of risk and highest form of liquidity. Investing in Fixed Deposit is a very smooth process and can be done at the tip of your fingers. You need to go through Fixed Deposit schemes of different banks and select the one as per your needs and requirements. Parking your investment in the correct Fixed Deposit in 2021 will ensure high fd returns on maturity and also a choice of regular interest payouts throughout the chosen tenure. To ensure high returns you must look for an FD scheme with high-interest rate payouts.

For a lucrative return of Fixed Deposit Investment, banks with higher interest rates are a must. Bajaj Finance offers a money-making return with an interest within the range of 5.65% to 6.50%. In 2021. 

Bajaj Finance Fixed Deposit is said to have one of the highest returns with an interest rate of up to 6.75%. Bajaj Finance offers lucrative opportunities for investment in Fixed Deposit and Bajaj Finance Fixed Deposit is a proven solution for falling FD rates. Apart from offering high returns, Bajaj Finance Fixed Deposit offers a flexible tenor, lets you choose your interest payment mode, avail tax benefits and easy access to loan, and lets you enjoy high credibility and stability. Customers also get an extra interest of 0.25% on renewing the Fixed Deposit. Senior citizens also get an extra interest of  0.25%  as an additional benefit.

Bajaj Finance also offers a Systematic Deposit Plan. It is a quick-saving tool that allows a depositor to make bite-sized monthly deposits as low as Rs. 5,000. It has applications of the recurring deposit and matures on the duration selected. Each new deposit is also booked at the interest rate applicable on the date of deposit.

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