Question 1

What is the difference between FD and RD?

Accepted Answer

A Fixed Deposit (FD) requires a one-time lump sum investment which earns a fixed interest over a set period. A Recurring Deposit (RD) allows you to deposit a fixed amount every month, making it ideal for salaried individuals building a corpus over time.

Question 2

Is FD interest taxable?

Accepted Answer

Yes, the interest earned on Fixed Deposits is fully taxable according to your income tax slab. Banks also deduct TDS (Tax Deducted at Source) automatically if the interest exceeds a certain threshold per year.

Question 3

Can I break my Fixed Deposit before maturity?

Accepted Answer

Yes, premature withdrawal of an FD is allowed in most banks. However, doing so usually incurs a penalty (typically around 1% reduction in the applicable interest rate for the period the deposit was held).

FD / RD Calculator

FD Maturity Plan

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