Bank FD vs RD: FD often yields better return on investment compared with RD, say expertsInvestment of surplus money can be restricted to fixed income instruments when the goal is to avoid risk.
That is a common view shared by many financial planners.
Fixed income instruments, such as bank fixed deposit or bank FD and recurring deposit or RD, provide a fixed return.
On a fixed deposit or recurring deposit of less than Rs 1 crore today, one can earn a return in the range of 5.5-7.75 per cent over a tenure of six months.
FD and RD are two common types of term deposit, wherein the investor earns an interest rate depending upon his or her choice of tenure.
Fixed income products are different from equity-related instruments, such as mutual funds, which offer market-related returns and come with market risks.
( When topickmutual fund over bank FD)Fixed deposit vs recurring deposit: which one to pickWhile fixed deposit is meant for an investor with a corpus of surplus money, that is extra cash that one has after meeting all liabilities and cash payments due at a particular period, recurring deposit is more suitable for someone not in possession of a sum of idle money but someone who has a regular source of income, say experts.
Just like a fixed deposit, a recurring deposit enables a person to enter into an agreement with the bank to deposit a sum on regular intervals.
For example, an investor having Rs 1 lakh of surplus cash may go for a fixed deposit for the desired term.
On the other hand, someone not in possession of that kind of lump sum at a time may set up a recurring deposit of, let's say, Rs 8,000 per month.FD vs RD: which offers better return"Both FDs and RDs are types of fixed investments which are offered by all major banks and financial institutions Generally, FDs have slightly higher interest rate over RDs," says Abhimanyu Sofat, head of research, IIFL.Once you have made up your mind about which way to invest, next step is to select a bank."Investors should check ratings, history of issuing companies and management, and terms and conditions of FDs if they are investing in FDs of corporates.
While investing in FDs and RDs of banks, investors should check the interest rates across different banks and features offered by them," adds MrSofat.State Bank of India (SBI) term deposit interest rates (applicable to FD as well as RD)TenorsInterest rate (in per cent) for public w.e.f.
28.05.2018Interest rate for senior citizens w.e.f.
28.05.20187 days to 45 days5.756.2546 days to 179 days6.256.75180 days to 210 days6.356.85211 days to less than 1 year6.46.91 year to less than 2 year6.657.152 years to less than 3 years6.657.153 years to less than 5 years6.77.25 years and up to 10 years6.757.25(Source: sbi.co.in)ICICI Bank fixed deposit interest rateRate of Interest (% p.a.) w.e.f June 07, 2018TenureGeneral publicSenior Citizen7 days to 14 days44.515 days to 29 days4.254.7530 days to 45 days5.5646 days to 60 days5.756.2561 days to 90 days66.591 days to 120 days66.5121 days to 184 days66.5185 days to 289 days6.256.75290 days to less than 1 year6.571 year to 389 days6.67.1390 days to 2 years6.757.252 years 1 day upto 5 years77.55 years 1 day upto 10 years77.55 Years Tax saver FD(Max upto Rs.
1.50 lac)77.5(Source: icicibank.com)(: Bank Fixed Deposits Vs Corporate Fixed Deposits: Interest Rates, Taxation, Risks)ICICI Bank recurring deposit interest ratesMaturity periodRate of interest (% p.a.) w.e.f June 7, 2018GeneralSenior citizen6 months66.59 months6.256.7512 months6.67.115 months6.757.2518 months6.757.2521 months6.757.2524 months6.757.2527 months77.530 months77.533 months77.536 months77.5Above 3 years upto 5 years77.5Above 5 years upto 10 years77.5(Source: icicibank.com)(: Recurring Deposit (RD) Interest Rates Of These Banks Are As High As 9%)Meanwhile, small finance banks often provide higher returns on fixed income products.AU Small Finance Bank fixed deposit interest ratesTenureInterest rate p.a.
(%)Interest rate p.a.
(%) for senior citizen7 Days to 1 Month 15 Days5.50%6.00%1 Month 16 Days to 3 Months6.75%7.25%3 Months 1 Day to 6 Months6.90%7.40%6 Months 1 Day to 12 Months7.00%7.50%12 Months 1 Day to 18 Months7.75%8.25%18 Months 1 Day to 24 Months7.15%7.65%24 Months 1 Day to 36 Months7.25%7.75%36 Months 1 Day to 45 Months7.30%7.80%45 Months 1 Day to 60 Months8.00%8.50%(Source: aubank.in)AU Small Finance Bank recurring deposit (RD) interest ratesTenureInterest rate p.a.
(%)For domestic/NRO depositsFor senior citizens3 Months6.75%7.25%6 Months6.90%7.40%9 Months7.00%7.50%12 Months7.00%7.50%15 Months7.75%8.25%18 Months7.75%8.25%21 Months7.15%7.65%24 Months7.15%7.65%27 Months7.25%7.75%30 Months7.25%7.75%33 Months7.25%7.75%36 Months7.25%7.75%37 Months to 45 Months7.30%7.80%46 Months to 60 Months8.00%8.50%61 Months to 120 months7.25%7.75%Suryoday Bankfixed deposit interest ratesPeriodInterest Rate(Per Annum)Senior Citizen Rate (Per Annum)7 days to 14 days4.00%4.00%15 days to 45 days4.00%4.00%46 days to 90 days5.00%5.00%91 days to 180 days5.50%5.75%181 days to 240 days7.50%7.75%241 days to 364 days7.75%8.00%12 months to 24 months8.50%8.75%>24 months to 36 months8.75%9.00%>36 months to 60 months7.75%8.00%>60 months to 120 months7.25%7.50%(Source: suryodaybank.com)Suryoday Bankrecurring deposit interest rates Interest RatesDomestic Deposits (Effective: From September 21, 2017)PeriodInterest RateSenior Citizen Rate#(Per Annum)(Per Annum)6 months7.50%7.75%9 months7.75%8.00%12 months8.50%8.75%15 months8.50%8.75%18 months8.50%8.75%21 months8.50%8.75%24 months8.50%8.75%27 months8.75%9.00%30 months8.75%9.00%33 months8.75%9.00%36 months8.75%9.00%Above 3 years to 5 years7.75%8.00%Above 5 years to 10 years7.25%7.50%One can make a decision primarily on the basis of interest rates and tenure while setting up a fixed deposit or recurring deposit at a bank, say experts.
Both FD and RD offer more or less same features.
So, a salaried person can invest in RDs since he/she receives regular income while a person having lump sum amount can invest in FDs, Mr Sofat of IIFL further says.