Question

how is term deposit account different from recurring deposit account

Answer 1

Answer:

A fixed deposit account (FD) is one in which the investor makes a one-time lump sum investment that is fixed for a pre-decided tenure. It is not possible to make additional deposits or withdraw money from the FD account during the tenure.

In a recurring deposit account (RD), money is deposited in installments in the specific account. For both the deposits, the interest earned falls between the range of 7.5-8.5%, depending on the bank and is taxable as per the income tax slab for that individual.

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Answer 2

The primary reason for the difference is that in FD you invest a lump sum amount and so the entire money earns interest for the specified period. But in a recurring deposit, the first installment earns interest for 12 months period, the second for 11 months, third for 10 months and so on.

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