FD or RD: separate the deposit schedule from the interest payout

A fixed deposit and a recurring deposit can both use a quoted annual rate, but the money does not spend the same amount of time invested. A fixed deposit begins with a lump sum. A recurring deposit builds the balance through installments. Comparing only the final amounts without comparing total deposits and timing can be misleading.

Match the question to the tool

Use the FD calculator when the money is available at the start. Use the RD calculator when you will contribute a fixed amount each month. If contributions increase annually or you are modelling uncertain investment returns, the SIP calculator may fit the question better. A SIP projection is not a bank deposit promise.

Cumulative maturity and payout income are different

In cumulative mode, interest stays invested and earns further interest. For ₹1,00,000 at 8% nominal interest compounded quarterly for a year, the mathematical ending balance is approximately ₹1,08,243.22 before tax.

In the simple quarterly payout model, the same principal and nominal rate pay ₹2,000 per quarter, with ₹1,00,000 principal returned at maturity. There is no compounding of the interest paid out unless you reinvest it elsewhere. The maturity principal and the sum of principal plus payouts must not be presented as the same number.

Check how monthly payouts are quoted

The FD tool estimates monthly payouts using annual interest divided by twelve. Some banks discount monthly payouts relative to a quarterly calculation. Consult the bank’s terms, including published interest calculation conventions, when checking a real offer. The example rate in the calculator is editable and is not a live offer.

Why RD deposit timing changes maturity

At zero interest, twelve deposits of ₹5,000 total ₹60,000 regardless of timing. At a positive rate, start-of-month deposits have more time to earn interest than end-of-month deposits. The RD tool converts the nominal annual rate and selected compounding frequency into a monthly equivalent. This is a consistent estimate, not a reconstruction of a bank ledger.

Missed installments, actual deposit dates, holidays and early closure can affect a bank’s outcome. The SBI recurring deposit overview describes the regular monthly deposit structure; use your own product terms for contractual details.

Keep tax assumptions visible

Our cumulative FD and RD tools reserve an optional effective tax amount from total interest at maturity. They do not model yearly TDS deductions or determine your final tax liability. A deposit that loses interest to tax along the way can compound differently. Explore tax timing in the after-tax comparison, while keeping the entered tax assumptions appropriate to your circumstances.