Difference between Savings Account AND Current Account.

Savings Account	Current Account
A savings accounts are deposit accounts which do not allow unlimited transactions	A current account on the other hand is meant for daily financial transactions
Savings accounts are best suited for salaried employees or people with a monthly income	Current accounts are ideal for individuals and firms that need to carry out monetary transactions on a day-to-day basis
Savings accounts earn interests which is normally in the range of 4% to 8%	Current accounts are non-interest bearing deposit accounts
Banks do not provide overdraft facility on savings account	Overdraft facility is provided
The minimum balance required to open a savings account is very low	The minimum balance for opening a current account is comparatively much higher
The main purpose of a savings account is to encourage people towards savings	The main purpose of a current account is to help individuals with multiple transactions

Differences Between Recurring Deposit (RD) and Fixed Deposit (FD)

Fixed Deposit and Recurring deposit are two most popular investment schemes in India, specially for the risk averse investors. The major advantage of investing your money in a fixed deposit scheme or recurring deposit plan is that there are fixed returns with no risk. But many a times, investors get confused if they have to invest in a RD plan or a FD scheme.

Both RD and FD are fixed income products that are offered by all major banks and financial institutions. In both the schemes, you can invest a specific amount and on the amount invested, you will receive a fixed interest. At the end of tenure, investors will receive both the capital as well as the interest.

While both RD and FD runs over a tenure, FD investors can deposit an amount once while RD investors must deposit a fixed amount at regular intervals.

Fixed Deposit

Customers who opt for fixed deposits will have to choose a tenure, which usually ranges from 7 days to 10 years, and must deposit an amount once. The interest on the amount will be credited to the investor’s account on a monthly or a quarterly basis. 

Recurring Deposit

When it comes to recurring deposits, investors can deposit a fixed amount every month and can earn interests. The interest is paid along with the capital at maturity.

Recurring Deposit vs Fixed Deposit

Features / Scheme	Fixed Deposit	Recurring Deposit
Tenure	Usually, for FD schemes, the tenure ranges between 7 days to 10 years. The investor can choose a tenure that he is most comfortable with.	Tenure for Recurring deposits usually vary from 1 year to 10 years. The customer has to deposit a fixed amount at regular intervals over the tenure.
Investment Limit	There is no limit on the amount that can be invested in a fixed deposit scheme. But, this limit generally depends on the bank and the minimum investment is Rs. 100 and multiples while the maximum limit is Rs. 1.5 lakh.	While there is no prescribed minimum or maximum limit, this usually depends on the bank. Many banks have the minimum investment limit as Rs. 1000 and and the maximum limit as Rs. 15 lakhs per month.
Rate of Return	For a period of an year, the interest rate varies between 6.96% to 8.00%. The interest rate depends on the capital and tenure opted for. The interest rate for FD is slightly higher than that of RD.	The interest rate varies between 5.25% to 7.90% for a tenure of one year. The rate of interest usually depends on tenure and monthly investment amount.
Tax benefits	For fixed deposit, a tax exemption under the section 80C of Income Tax Act 1961 is applicable.	Income tax will be not deducted if the interest you earn on your rd is up to Rs.10,000.
Documents Required	Identity Proof and address proof. Customers will have to submit documents like PAN card, passport and income documents, if required.	Address proof and Identity Proof. Investors will have to submit documents like PAN card, passport and income documents, if required.
Income Interest	Interest earned on your FD is taxable and most of the banks deduct TDS.	Interest earned on your RD is taxable and most banks do not have the facility of TDS.
Additional Benefits	Loan Facility	-
Eligibility	·         Resident Individuals ·         Hindu Undivided Families ·         Public and Private Limited Companies ·         Trusts and Societies ·         Resident Individuals ·         Trusts and Societies ·         Hindu Undivided Families ·         Public and Private Limited Companies	-
Withdrawal	At the end of tenure. Premature withdrawal is allowed with penalty.	At the end of opted tenure. Premature withdrawal is allowed with penalty.

What Should You Choose - RD or FD?

For people who do not have a lump sum to invest in a FD, but can afford a small portion of investment amount from income every month, a recurring deposit (RD) seems to be the right fit. Both RD and FD are best suited for risk averse investors who are mostly in the lower tax slab. Use an online recurring deposit calculator to see what suits best for the amount that you can invest. Although one single investment product cannot meet all needs, a RD is preferred by many because it puts considerably less financial strain and gives almost the same returns as FD.

Recurring Deposit vs Fixed Deposit

Fixed Deposits and Recurring Deposits are among the most popular investment options in India. If you are planning to invest in either of this, you must be aware of the differences between Recurring Deposit and Fixed Deposits. It is very common for the first time investors to get confused between RD and FD.

While both Recurring Deposit and fixed deposits are offered by most of the banks in India, each come with their own advantages and disadvantages.

Before investing in a Recurring Deposit or Fixed Deposit scheme, you must be familiar about certain important features of the scheme such as rate of interest and investment limit.

Tax on Recurring Deposit Interest rates

Recurring Deposit is a very popular investment scheme amongst the risk averse Indians mainly because of the good returns and savings benefits that it offers. In a Recurring Deposit scheme, you will have to deposit a fixed amount of money every month for a predefined period of time and the amount will fetch you interest. But, for interest that you earn on Recurring Deposit investment amounts, 10% will be deducted as TDS. Also, the Tax Deducted at Source (TDS) will be 20% if the Pan information is not provided. The Tax Deducted at Source (TDS) varies depending on your annual income, your age and the interest that your accrue on your RD amount.

Which Banks Offer the Highest Recurring Deposit Interest Rates in India?

One of the most preferred investment options in India, Recurring Deposit schemes offer good interest returns with almost no risks involved. In a recurring deposit scheme, the investor will be required to make deposits of a fixed amount every month over a fixed tenure. Almost all major private and Government Banks in India offer Recurring Deposit schemes with competitive interest rates. Generally, the interest rate for a RD scheme is based on several factors like tenure, principal amount and the plan that you choose. Also, the interest rate for recurring deposit schemes vary from bank to bank and it is important that you are well informed about the interest rates offered by all major banks so you can zero in the perfect Recurring Deposit plan for investing your hard earned money.

Benefits of Recurring Deposit Interest Rates

Safe investment - Recurring deposits carry no risk or very little at all. Choose a stable and secure bank to ensure that your money is safe. Recurring deposits are just a simple investment of your money and do not dabble in the markets. Therefore the interest rate will not fluctuate and you do not stand to lose any money.

Earn while you save - Your deposit will earn interest from your first contribution. The interest accumulated will increase through your tenure. The longer you invest, the more interest you will earn.

Lump sum payout - At the end of the RD tenure, you will receive a lump sum of cash. This amount includes your contribution plus the interest earned. You can use the money to reinvest it or spend it on what you were saving for.

Online access - Most banks offer Internet Banking services which you can use to open deposits, access your accounts and see the progress of your deposit. You can also view the different interest rates offered. You can pick the tenure and deposit amount suitable to you and also earn the highest interest offered.

Loan offers - When you have an RD with a bank, you sometimes get pre-approved loan offers. In other cases, your loan applications will be given preference and your processing might be faster. In addition to this, banks offer concessional interest rates on loans as well. 

Factors That May Affect Recurring Deposit Interest Rates

Type of account - The account you hold will make a difference in the eligible interest rates. Regular savings accounts usually get higher interest than the NRE/NRO accounts. Some banks offer the same interest rates to both account holders.

Tenure - The tenure of your deposit is one of the most important factors in determining the RD interest rate. Medium term deposits generally earn a much higher interest rate. Some banks offer the highest rate on long-term deposits of 10 years. But this is not always the case as some banks also offer the same interest rate on a 1-year deposit as well as a 10-year deposit.

Age - Almost all banks offer a higher rate of interest to senior citizens. This rate is usually 0.5% per annum higher than the regular interest rates. Junior accounts can also stand to earn a higher interest rate. This depends on the bank’s offer on minor accounts.

Choice of bank - Interest rates vary quite a bit between different banks. Currently, the top banks offer recurring deposits starting at 7% per annum interest. Nationalised banks tend to offer a higher interest rate of up to 8% per annum.

Schemes on offer - Banks also have different recurring deposit schemes running. Corporation Bank has a Millionaire Scheme on offer wherein you will receive a million rupees at the end of the scheme. This deposit carries a very high interest rate of 9.25% per annum. So the choice of your deposit scheme will also factor into the interest rate. Depending on the benefits offered with the RD scheme.

Recurring Deposit Interest Rates

The interest rates on RDs depend on which category you fall under and your choice between different banks. Senior citizens earn a higher rate of interest when compared to regular citizens. There are schemes offered to minors, students and parents to save for the children. These schemes may carry higher rates of interest. There are also special schemes devised to help people reach their goals. Your interest rates also depend on the type of account you hold. A regular savings account will generally earn a higher rate of interest than an NRE/NRO account. The current interest rates available from different banks range between 4.5% and 7.90% per annum.

Types of Recurring Deposit Interest Rates

Regular Savings Scheme - Banks offer recurring deposits to Indian citizens above the age of 18 years. Customers can choose to deposit a fixed sum of money for a period of time, usually between 6 months to 10 years. Interest can be computed on simple or compound basis. At the end of the tenure, the lump sum amount can be withdrawn. Some schemes allow you to reinvest the money. You can open a recurring deposit for as little as Rs. 10 per month. The interest rates on the regular recurring deposits range between 7% to 8% per annum.

Junior RD Schemes - Bank’s also offer recurring deposit schemes for kids. Parents or guardians can open these deposits for their children to start saving for their future, education and other needs. Students can also avail of these deposit schemes. Learning to handle finances and the importance of saving at a young age will help inculcate a smart sense of money. The interest earned on these deposits will either be equivalent to the regular RD schemes or be higher to encourage saving amongst the youngsters.

Senior Citizens RD Schemes - Banks offer higher rates of interest for senior citizens. Usually, 0.50% per annum is given over and above the prevailing interest rate. The interest rates range between 7.5% to 9.25% per annum. There are also schemes available that are designed to help senior citizens during their retirement and old age.

NRE/NRO RD schemes - NRE and NRO recurring deposit accounts may be offered a lower interest rate. Furthermore, senior citizens who hold NRE/NRO accounts will not be offered the additional interest rate. These accounts attract around 7.50% interest per annum.

Special RD Schemes - Banks offer different schemes designed to suit the needs and capabilities of a variety of people. These schemes generally carry a higher rate of interest as your goal is more specific. ICICI Bank offers the iWish deposit which allows you to contribute various amounts of money to your RD account. Furthermore, other people can also contribute to help you reach your goals. There are RD schemes with free life insurance available. With certain schemes, you are allowed to withdraw the money in part without breaking the full deposit. Other schemes reward you with a bigger lump sum amount which makes it a worthwhile investment.