Many times, the investors get confused over investing in either a fixed deposit or recurring deposit for earning higher returns or for achieving their investment objectives. The benefit of both the forms of investment is that these generate fixed returns along with ensuring the safety of investment money of the investors. It is usually upon the will of the investor to invest in any of the deposit schemes for attaining their financial goals. However, recurring deposits have been observed to generate a great value of invested amount through various add-on features.

What is a Recurring Deposit and How does it Work?

In a typical recurring deposit scheme, the investor is supposed to invest a certain amount of money every month over a pre-defined tenure. This fixed tenure usually varies between the duration of one to five years.

The major advantage offered by the recurring deposit over the fixed deposit scheme is that in a fixed deposit scheme, the investor is supposed to make the investment as a lump sum once. This invested amount has to be left untouched for a fixed period of time. So, for those individuals who cannot make it gather a lump sum and might be looking forward to an easier option of investing some amounts every month –the recurring deposit scheme is the most lucrative one.

In a recurring deposit scheme, the principal amount that is deposited is returned at the end of the tenure along with the interest. Usually, the interest gets calculated on a quarterly basis with respect to the recurring deposits. You can use this recurring deposit calculator to calculate the amount.

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Benefits of Recurring Deposits Over Fixed Deposits

The banks nowadays, are offering lucrative rates of interests over the recurring deposits. Therefore, as a customer, you can be convinced of earning higher returns upon your investment. In addition to this, the investment in a recurring deposit can yield the following advantages:

  • Useful for Planning Short-Term Goals: In case of fixed deposits, the invested amount gets locked up with the bank for a fixed period of time. The investor is able to get higher returns upon the investment only after a good long period of time. Therefore, fixed deposits can be considered to be a lucrative option only if you are aiming at long-term profits.

With the recurring deposits, those who are not willing to invest for long term, they can deposit on a short-term basis as well with the help of recurring deposits. Thus, those with lower investment capacity can also achieve short-term investment goals by investing into recurring deposits.

  • Flexible Mode of Investment: With fixed deposit, the investors are required to invest a lump sum and thus, they are left with no other option. However, with recurring deposits, as the investment is based on a monthly basis, it offers a great flexibility to the investors. In most of the cases, some leading banks do not even penalize the investors in case they are not able to invest for a certain month.

  • Ease of Investment: For the salaried or fixed-income investors, the recurring deposit schemes offer a great ease of investment as they can set aside a smaller portion of their income every month for making the investment. As such, they do not have to collect a huge amount for investing which reduces their financial burden.


  • Exciting Online Features: Nowadays, the recurring deposit schemes have become more accessible through the online platform from where the investor can carry out a huge range of functions. From opening a recurring deposit account to viewing and analyzing the transactions, closing an account, and so more –all of these are offered by the recurring deposit schemes.

You can consider investing into a recurring deposit scheme for achieving greater benefits!