Fixed Deposit (FD) and Recurring Deposit (RD) are sub-types of a term deposit. An account holder can open a term deposit to keep his/ her money safe and earn interest on it. There are two types of Term Deposits: Fixed Deposits and Recurring Deposits. And they are among the most preferred investment options in India. FDs and RDs offer similar benefits within a fixed period. But they differ in the value and manner in which the account holder earns monetary benefit.
Features of Fixed Deposit
Lump sum deposit - You can open a fixed deposit only by depositing a lump sum amount. You have to deposit this amount for a fixed tenure (time). The minimum tenure is for 7 days, and the maximum can go up to 10 years. The account holder/ nominee can fix the tenure.
Monthly/ Quarterly Pay-out - The minimum investment amount for an FD is ₹10000. But this rate is subject to change by the concerned bank/ financial institution. Account-holders get a fixed interest on the principal amount invested by them every month or quarter, depending on the terms of pay-out.
Auto renewability - FDs are auto-renewable. Which means your account remains secure in times of inactivity. Moreover, at the end of the tenure, you have the option of renewing the principal/ principal + interest earned and in turn, earn further interest.
Features of Recurring Deposit
Monthly deposit - A recurring deposit requires the payment of a fixed amount per month for a fixed tenure period. There is no option of depositing a lump sum amount. The minimum tenure period for an RD is 6 months, and the maximum tenure period can go up to 10 years. The account holder/ nominee can fix the tenure period.
Maturity Pay-out - The minimum investment amount for an RD is ₹1000. But this rate is subject to change by the concerned bank/ financial institution. Account-holders get a fixed interest on the principal amount invested along with the principal amount only on maturity, i.e. the completion of the tenure fixed by them.
Penalty for default – Although your account remains secure in times of inactivity, RDs are not auto-renewable. Moreover, if there is a delay in making the monthly payment, you become liable to pay a penalty amount for default. This amount, though nominal (at the rate of ₹1 for ₹100) can lead to a permanent closure of the RD account by the concerned bank/ financial institution. The penalty is also applicable in the case of a Fixed Deposit.
Apply for Fixed Deposit/ Recurring Deposit with YES Bank
You can easily open an FD/RD with YES Bank, either on a sole basis or in conjunction with a nominee/ co-accountholder. YES BANK offers competitive interest rates, provides greater returns, and assures maximum security of your savings.
Key offerings for FDs include:
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High-interest rates
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Higher interest rates for senior citizens
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Auto-renewable option available
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Five years of tax-saving (subject to the prescribed limits by Income Tax Act, 1961)
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Compound interest on reinvestment of principal amount + interest earned
Key offerings for RDs include:
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High-interest rates
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Higher interest rates for senior citizens
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Monthly instalment amount as little as ₹1000
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Encourages habit of regular saving
Both FD/ RD give you a guaranteed return on your principal amount and are safe investment options. FDs are more suitable for those who have a lump sum amount to invest and are looking for monthly/ quarterly cash flow. RDs are suited for those who prefer to pay nominal monthly amounts and are fine with a long-term maturity pay-out.