FIXED DEPOSIT: V/S RECURRING DEPOSIT:
1. Meaning
It is that type of account where a fixed sum of money is deposited for a fixed period.
A certain amount is deposited at regular intervals, say every month.
2. Purpose for Depositors
The main purpose is to get a lump sum amount on the maturity of the deposit.
The main purpose is to accumulate a certain amount after a certain period, say 5 years.
3. Who operates
It is operated by those individuals and organisations who have excess or idle money.
It is operated by salaried persons and small businessmen or professionals.
4. Interest
The rate of interest is high. It can be 6% to 10% depending upon the period of deposits.
The interest rate is higher. It is as high as fixed deposit interest rate.
5. Period/Duration
The amount can be kept for a fixed period, minimum 7 days, and, maximum say 10 years.
The amount is deposited at regular interval, say every month, for a certain period, say 5 years.
6. Withdrawals
Withdrawals are not permitted, but one can close the account before maturity date.
Withdrawals are normally not permitted, but one can close the account before maturity date.
