Difference between Fixed Deposit and Recurring Deposit

Money is quite essential and saving up on it is considered a healthy habit. That is why there are a ton of financial instruments and money-saving mechanisms out there. These schemes help you to build over the course of time. Therefore, they are quite popular amongst people. Now, there is a high chance that you have probably heard of terms such as fixed deposit and recurring deposit. But the question is, are you well aware of the difference between a fixed deposit and a recurring deposit?

If not, here is a blog to help you understand these concepts, and what makes each of them stand out from the other.

What is a fixed deposit?

A fixed deposit provides you with a higher rate of interest than a traditional savings account. Here, you submit a specified sum of money to the bank and earn interest over it for a fixed tenure. It is an effective way to put away your money for the long run, and the higher interest rate also means you benefit more from it.

The money that you put away is safe from the volatility of the market. In addition, there is a very high guarantee that you will get your lump sum amount with the interest at the end of the pre-determined tenure. Thus, a fixed deposit is an extremely safe investment option, and that is exactly why it enjoys wide popularity.

What is a recurring deposit?

Recurring deposit is yet another investment scheme, where you submit funds to an account and earn interest from it. It is a system where you invest regular amounts each month, and that makes it quite a flexible method. Furthermore, the interest rates on these investment schemes are also quite attractive. Hence, it makes so much more sense to invest your funds in these rather than keeping them in your savings account.

What are the features of recurring deposit?

Here are the features of a recurring deposit account:

1. It has been designed to ensure that you make a habit of saving a certain amount of money each month.
2. You should remember that the minimum amount that you have to deposit in a recurring account can vary from one bank to another.
3. The minimum term of deposit for a recurring account is 6 months, whereas the maximum term is 10 years.
4. You can also avail a premature withdrawal of your funds in case, there are any emergencies. However, this depends upon the bank.

What is the difference between a fixed deposit and a recurring deposit?

It is quite important that you are well aware of the differences between fixed and recurring deposits. Therefore, here are some parameters based on which they differ:

1. Depositing the amount: In a fixed deposit scheme, you submit the funds right at the start. On the other hand, in a recurring deposit scheme, the funds are submitted at the start of each month.
2. Availability: A fixed deposit account can be opened by anyone, there are no limitations here. Whereas, for a recurring deposit, only a person with a regular source of income can open the account.
3. Flexibility: In a fixed deposit, the amount you invest is a one-time investment. However, in a recurring deposit, you have to submit funds recurringly, and that is how it gets the name.

In addition to these differences, the recurring deposit is ideal for people who wish to invest a small amount regularly. It is quite helpful as well since not many people are comfortable handing over a large sum of money to FD right away. Now, although you can withdraw money from your FD, it is still ideal not to do so.

Open your new fixed deposit bank account with Airtel Payments Bank

Well, if you are looking forward to opening a fixed deposit bank account, then now is the time for you to download the Airtel Thanks app. Airtel has recently joined hands with IndusInd Bank and is now offering a fixed deposit scheme that provides interest rates up to 6.5% per annum. In addition, senior citizens will also get an additional 0.5% per annum on their investment.

But, that is not all for the Airtel Thanks app. It is an excellent mobile recharge app, as it lets you recharge various prepaid, postpaid, broadband, DTH and other connections. In addition, you can use it for money transfer as well, by making cashless payments wherever you go.

Thus, download the Airtel Thanks app today, and experience all these benefits right away!