RD vs FD: Same Bank, Same Rate — Different Jobs
Written by lemmatools Editorial Team · Last updated: · 5 min read
The maths: why FD "beats" RD
Put ₹3 lakh in a 5-year FD at 7% and you earn about ₹1.13 lakh of interest. Feed the same ₹3 lakh in as a ₹5,000-a-month RD at the same 7% and you earn roughly ₹60,000. The FD is not a better product — its money simply arrived on day one, while the RD’s average rupee was invested for only half the tenure. Any comparison that ignores this is comparing having money with not having it yet.
The real question: do you have the money now?
- Money in hand → FD, always. Same rate, more interest-time.
- Saving from salary as you earn → RD is the only honest option, and it beats letting cash idle in savings at 3%.
- Rate risk cuts both ways: an RD locks today’s rate for all future instalments — a quiet win when rates are falling.
- Tax treatment is identical: interest at slab, TDS past ₹50,000/year of bank interest.
- For horizons beyond ~5 years, compare the RD against a SIP instead — that is the comparison that changes outcomes.
Both calculators here show the other product on your numbers: the RD calculator prints what the same total money would have earned as an upfront FD, so the trade-off is never hidden.