Fixed Deposits vs Recurring Deposits (FD vs RD) Guide

What is the minimum tenure for a Fixed Deposit?

The minimum tenure for a bank Fixed Deposit is 7 days, and the maximum tenure is 10 years.

How does TDS work on FD interest?

Banks deduct 10% TDS at source if interest income from deposits exceeds ₹40,000 in a year (₹50,000 for senior citizens).

What is Form 15G and Form 15H?

These are self-declaration forms submitted to banks to prevent TDS deductions on interest income, applicable only if your total annual income is non-taxable.

What is a Tax Saving FD?

A special FD with a mandatory 5-year lock-in period that qualifies for tax deductions under Section 80C up to ₹1.5 Lakhs per year.

Can I take a loan against my Fixed Deposit?

Yes, most banks offer overdraft loans up to 90% of your FD value, at an interest rate that is usually 1-2% higher than the FD rate.

Is RD compounding monthly or quarterly?

In India, RDs are compounded quarterly, which means interest earned is added to your principal base every three months.

What happens if I miss a monthly RD installment?

Banks allow a grace period, but if you miss payments consistently, they will charge a small penalty and may close your RD account.

Are post office deposits safer than bank deposits?

Post office deposits are backed directly by the Government of India, making them marginally safer than commercial bank deposits.

What is DICGC insurance cover?

The Deposit Insurance and Credit Guarantee Corporation guarantees bank deposits (FD, RD, Savings) up to ₹5 Lakhs per customer per bank if the bank fails.

Which is better: Cumulative or Non-Cumulative FD?

Cumulative is better for wealth growth due to compounding, while Non-Cumulative is better for retirees who need monthly or quarterly income payouts.

Understanding Fixed Deposits and Recurring Deposits

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