Savings Account, Recurring Or Fixed Deposit: What Will You Choose?

Savings Account, Recurring Deposit Or Fixed Deposit - What Will You Choose


Money, if only saved and not invested, loses its value in the face of inflation. The price hikes with every passing year render the savings in our lockers useless. If our savings are to keep pace with time, we must invest them wisely.


Now when we think of investment, at the basic level of it, we have three popular choices. These are the savings account, the fixed deposit interest rates, and the recurring deposit interest rates. To choose from these options, we must first make ourselves aware of their concepts.

Will you choose Savings Account?

When you open an account with a bank, this is the kind of account that the bank provides you with. You can deposit and withdraw money to and from these accounts whenever you feel the need. The deposit amount earns interest daily.

Will you choose Fixed Deposit?

Here, you deposit an amount in the account for a fixed tenure. While in the account, the amount earns interest and at the end of the mandate, the whole amount with the benefit is given back to the depositor.


Will you choose Recurring Deposit?

In recurring deposit, you deposit a fixed amount monthly over a fixed tenor. The amount earns interest on your deposit, and this interest is taxable. You get the whole amount along with interest, at the end of the tenor.

What differentiates these three forms of investments from one another?

  • Interest Rates

The interest that your deposit earns in a savings account varies with the market fluctuations. Moreover, in the savings account, the interest calculation is done daily.

In both the FD and the RD, the interest rates are fixed. For a tenor of 1 year, the standards for FD range from 6.96% to 8%, while with RD, this variation is from 5.29% to 7%. The interest calculation is done on a quarterly or yearly basis.

  • Tax Benefits

If the interest you earned is up to 10000, RD and FD give you tax benefits whereas the savings account doesn’t.

  • The interest earned by the amount in FD is mostly taxable, and a large number of banks include this under TDS. In the case of RD, it is the same but without the TDS inclusion. The interest in the savings account is entirely taxable.
  • Tenure

The savings account has no tenor period associated with it. The RD and FD do have these associations but these periods are different with different banks. RD has a tenor that can be of 7 years maximum. The tenure of FD varies from 7 days to 10 years.

  • Balance limit

In the savings account, you can deposit any amount that you want. In the case of FD, the terms and conditions of the bank decide the deposit amount. For the RD, you have to decide on a particular amount while opening the account. It is the amount that you have to deposit in the account every month.

  • Loan Against the Account

You can avail loans with your FD as collateral. With domestic FD, the banks offer as much as 90% of your FD value. RD and the savings account do not provide any such conveniences.


  • Withdrawal

With the savings account, you decide when and how much you need to withdraw. There is no restriction. The RD and FD do not allow you to withdraw the amount before the end of the tenor. If you do so, you have to pay the penalty.



When you are to choose among these three options for investment, make sure that you know the critical aspects of each of them. You must also see the purpose of your investment. With this information, you can make an informed and beneficial decision.

Read also: Avoid TDS on Fixed Deposits

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