New Delhi, Business Desk. Fixed Deposit (FD) is one of the most popular options when it comes to risk-free investing. Especially for this goal when you want your capital to be well saved for the future. A bank deposit is an easy and convenient way to save money and is one of the safest investment options, along with guaranteed returns. Apart from FD, banks also offer the option of Recurring Deposit deposits, which can be opened easily.
What is the difference between FD and RD
FD, RD are two sides of the same coin. While both the interest rate and the benefit are the same in these deposit schemes. Yes, there is definitely some difference in the method of investment, minimum investment amount, tenure, etc.
What is common between FD and RD
FD and RD are both fixed-income investments, both of which give guaranteed returns on maturity. The interest rates offered on FD and RD are also almost the same. FD and RD can be opened in the bank branch through internet or mobile banking. You can also open a joint FD or RD. FDs and RDs can be opened in the names of spouses, children, parents or other close family members.
- FDs can invest in minium for 7 days and maximum for 10 years. At least 6 months and maximum 10 years in RD.
- Investment of at least 5 thousand to 10 thousand in FD, while investment in RD from Rs 100 to Rs 500.
Tax on FD, RD
Tax rules are the same for FD and RD. As per the current rules, you have to pay income tax if you earn more than Rs 10,000 interest in a financial year. Interest is added to your income and taxed according to your income tax slab. Banks also deduct TDS if the interest is more than Rs 40,000 in a financial year. For senior citizens, the TDS limit is Rs 50,000.
Choose between FD and RD
Fixed Deposit: For those wishing to invest a lump sum, FD is a good option. It is also a better option for those who are looking for cash on a regular basis, as with FD you can choose pay-outs monthly or on three months. For example, retirees can invest in long-term FDs at the time of retirement. Salaried employees can also select FDs to invest their annual bonus.
Recurring Deposit: For people who do not have a lump sum to invest, RD can be a better option. For example, you can save regularly in RD and use it as your child’s school or college fees. If you want to save for international travel, investing in RD is a good option.
