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Term deposits and fixed deposits are two popular investment options in India. But most investors don’t realise that these are different terms. A term deposit is a broader category.
Under this umbrella, you get multiple investment options, such as regular fixed deposits, Recurring Deposits (RDs), Post Office Term Deposits (TDs), Senior Citizen Savings Scheme, and more.
On the other hand, a fixed deposit is just “one type of term deposit” where you invest a lump sum for a fixed tenure. Want a detailed comparison? In this article, you’ll first learn about what term deposit schemes are and their several types. Next, you will see a comparison table showing term deposit vs fixed deposit differences.
What is a Term Deposit Scheme?
A term deposit plan is an investment option where you place a certain amount of money in a bank, NBFC, or post office for a fixed period. The duration of a term deposit can be both short-term (from 7 days to 1 year) and long-term (up to 10 years). Also, you must deposit at least the minimum amount set by the financial institution.
Now, during this period, your money earns a fixed interest rate. Also, you receive guaranteed returns at the end of the term. For more clarity, let’s check out five major types of term deposits in the next section.
5 Common Types of Term Deposits
Term deposit plans come in different forms. Each scheme offers a non-market-linked and guaranteed return. Also, all of them involve investing money for a fixed period at a set interest rate. However, the structure and benefits differ. For a better understanding, check out the five common types of term deposit plans:
1. Fixed Deposit
A fixed deposit account is an investment where you deposit a lump sum of money for a chosen duration. The interest rate offered depends on the duration of the deposit. You can even calculate your returns in advance using an FD rates calculator.
Normally, you cannot withdraw the money before maturity, but banks may allow you to break your FD with a penalty on the interest earned. However, some FDs do not allow early withdrawal, such as:
- Tax-Saving FDs (qualify for a deduction of up to ₹1,50,000 under Section 80C)
and
- Non-Callable FDs
In addition, many banks offer a sweep-in/sweep-out facility, where any excess balance above a set limit in your savings account can be automatically transferred into a fixed deposit account. This allows you to earn higher interest on idle funds. To explore some good FD options, you can visit the GoldenPi platform.
Now, if we talk about term deposit and fixed deposit differences, you may realise that every FD is a term deposit, but not every term deposit is an FD.
2. Recurring Deposit
A recurring deposit is a term deposit plan where you deposit a fixed amount of money regularly (usually every month) into your account for a set period. The bank pays you interest on the total balance. The rate is generally higher than a savings account and close to what fixed deposits offer.
At the end of the chosen period, you receive both the total money you deposited + the interest earned. For several investors, RDs may be more flexible because you can select the deposit amount and duration based on your financial goals.
3. Post Office Term Deposit (TD)
This term deposit scheme is available in four options: 1 year, 2 years, 3 years, and 5 years. You can start with a minimum deposit of ₹1,000 with no maximum limit. The interest is compounded quarterly but paid out annually. It is credited to your Post Office Savings Account or bank account (you usually intimate this before through written instructions).
Furthermore, accounts can be opened by:
- A single adult
- Up to three adults jointly
- A guardian for a minor or a person of unsound mind
As of September 23, 2025, the interest rates (applicable for the July to September 2025 quarter) are:
| Tenure | Interest Rate |
|---|---|
| 1 year | 6.9% |
| 2 years | 7.0% |
| 3 years | 7.1% |
| 5 years | 7.5% |
Note: Interest rates pertaining to National Savings Schemes run through Post Offices change every quarter. The above rates are valid from July to September. Investors must check the latest rates before investing.
Be aware that a 5-year TD also qualifies for tax benefits under Section 80C of the Income Tax Act, 1961.
4. National Savings Certificate (NSC) VIII Issue
The Post Office NSC is a government-backed term deposit plan with a fixed maturity period of 5 years. It can be opened with a minimum of ₹1,000 with no maximum investment limit. The scheme is available only to resident Indian individuals.
Accounts can be held:
- By a single adult.
- Jointly by up to three adults (either Joint ‘A’—operated jointly, or Joint ‘B’—operated by any one holder).
- A guardian for a minor or a person of unsound mind.
The deposit qualifies for tax deduction under Section 80C of the Income Tax Act (up to ₹1,50,000 under the old regime). Interest is compounded annually and is added back (re-invested) to the certificate amount for the first four years.
At the end of 5 years, the investor receives the original deposit + the total accumulated interest. As of September 23, 2025, you can get 7.70% p.a. for the July-September 2025 quarter.
5. Senior Citizens Savings Scheme (SCSS)
The SCSS is another government-backed term deposit scheme for individuals aged 60 years or above. An account can be opened with a minimum of ₹1,000 and up to a maximum of ₹30 lakh (across all SCSS accounts held by one person).
When it comes to interest payment frequency, it is paid every quarter on:
- 31st March
- 30th June
- 30th September
- 31st December
This term deposit plan has an initial maturity of 5 years, but it can be extended any number of times in blocks of 3 years. Extension must be requested within 1 year of maturity. The extended account will earn interest at the rate applicable on the date of maturity or renewal.
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Term Deposit vs Fixed Deposit – Major Differences You Must Know in 2025!
As an investor, you must understand that a term deposit is the broad category, while a fixed deposit is just one of its types. So, term deposit = the family, and fixed deposit = one member of that family.
To make this distinction easier, check out the detailed comparison table below:
| Feature | Fixed Deposit | Term Deposit |
|---|---|---|
| Meaning |
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| Types Covered |
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| Deposit Pattern |
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| Withdrawal Rules |
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| Tax Benefits |
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Want to Book a Fixed Deposit Online? Visit the GoldenPi Platform Today!
Till now, you must have learned that a term deposit is a blanket category that covers fixed deposits. Both are non-market-linked investment options with a fixed maturity date.
However, they differ in some ways:
- Term deposits include FDs, RDs, tax-saving deposits, and more, while an FD is only one of its type.
- Term deposits can involve lump-sum or recurring contributions, but FDs always require a lump sum.
- Withdrawal rules vary across term deposit plans. Whereas, FDs usually allow premature withdrawal with a penalty (except tax-saving or non-callable FDs).
- Only 5-year FDs qualify for tax benefits under Section 80C.
Are you looking for good FD options? You can visit GoldenPi and explore multiple choices offered by leading small finance banks and NBFCs. Also, you can open an FD online within minutes from the comfort of your home. No branch visits required!
Term Deposit vs Fixed Deposit FAQs
1. Is a fixed deposit a term deposit?
Yes! In a term deposit, you can invest a lump sum or monthly with a bank or institution. Whereas, fixed deposit (FD) is one type of term deposit where only a lump sum is invested.
In both options, you make an investment for a fixed period and at an agreed interest rate.
So, you can understand that every FD is a term deposit, but not every term deposit is an FD.
2. Are term deposit plans safe?
Bank deposits are insured up to ₹5 lakh by DICGC (Deposit Insurance and Credit Guarantee Corporation). Whereas NBFC deposits are not insured and carry a higher risk.
At the same time, Post Office term deposit plans are backed by a sovereign guarantee, which makes them 100% safe.
3. What are the latest FD rates 2025?
As of September 23, 2025, Suryoday Small Finance is offering competitive interest rates up to 8.40% p.a. (for senior citizens) and 8.20% p.a. (for general customers) for a tenure of 5 years.
Alternatively, if you are looking to book corporate FDs, Shriram Finance is offering Interest rates up to 8.15% p.a. (includes 0.50% p.a. for senior citizens + 0.05% p.a. for Women). If you are looking to invest in these fixed deposit online, you can visit the GoldenPi platform.
4. How to calculate my term fixed deposit account returns?
You can calculate returns using an online FD calculator. All you must do is input four basic values, such as:
- Deposit amount
- Citizen type (regular or senior citizen)
- Tenure
- Interest rate (usually pre-filled based on inputs 2 and 3)
Now, the calculator instantly shows the maturity value, including both principal and total interest earned. To make a free estimation, you can use this free FD calculator multiple times. No login or signup required!
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Disclaimer:
This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the securities market are subject to market risks. Read all the offer-related documents carefully before investing.
Fixed Deposit schemes are regulated by the Reserve Bank of India. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.
