Home

Banking Services

Borrow

Cards

Current Account

Deposits

Personal Finance

Savings Account

Deposits

Fixed Deposit vs Certificate of Deposit: A Comprehensive Guide

Disclaimer: Ujjivan Small Finance Bank does not offer Certificate of Deposit. This blog is written for generic information only.

July 21, 2025

Apply Now

Fixed Deposits (FDs) and Certificates of Deposit (CDs) are two popular time-deposit investment options offering fixed returns. While both are low-risk instruments, they cater to different needs and investor profiles. This article delves deep into the nuances of FDs and CDs, helping you decide the right choice for your financial goals.

What is a Fixed Deposit (FD)?

A Fixed Deposit is a financial instrument provided by banks and financial institutions. For FDs, you need to deposit an amount, generally starting from 1,000, for a fixed tenure. It’s a one-time investment, wherein you deposit the amount and receive interest pay-outs either monthly, quarterly, half-yearly, annually or at maturity, based on the interest pay-out option selected by you.

The interest rate remains fixed throughout the tenure and is calculated based on the compound interest method. With banks like Ujjivan, you can enjoy higher returns, up to 8.25%* p.a. on your FD investment. The tenure generally ranges from 7 days to 10 years. In case of cash crunch, you can either opt for premature withdrawal, or can avail a loan or overdraft against FD.

FDs are a go-to choice for conservative investors seeking stable returns over short or long periods.

What is a Certificate of Deposit (CD)?

Certificates of Deposit or CD are time deposits issued by banks and financial institutions. CDs are usually issued in large denominations, starting from ₹1 lakh and in multiples thereafter. The maturity ranges from 7 days to 1 year for banks and 1 to 3 years for financial institutions.

CDs often offer higher rates than FDs but are influenced by market conditions and the issuing entity. CDs are transferable and can be traded in the secondary market. Unlike FDs, loans cannot be availed against CDs due to their transferable nature.

CDs are ideal for institutional investors or individuals with surplus funds seeking short-term, high-return options.

Key Differences Between Fixed Deposit and Certificate of Deposit

Feature	Fixed Deposit (FD)	Certificate of Deposit (CD)
Minimum Investment	Starts as low as ₹1,000	Starts at ₹1 lakh
Target Audience	Suitable for individuals	Commonly used by institutions
Tenure	7 days to 10 years	7 days to 3 years
Interest Rates	Moderate and fixed	Generally higher but market-linked
Liquidity	Premature withdrawal allowed (with penalty)	Transferable in the secondary market
Security	Deposits up to ₹5 lakh insured under DICGC per depositor per bank	Not insured
Loan/OD Facility	Available	Not eligible for loans
Risk	Low	Slightly higher due to market dependency

Which One Should You Choose?

The choice between FDs and CDs depends on your financial objectives:

FDs: Best for individuals looking for long-term investments, steady returns, and low risk. They also offer the added benefit of being used as collateral for loans.
CDs: Suited for entities or individuals with surplus funds who prefer short-term investments and can handle slightly higher risk for better returns.

Final Thoughts

Both Fixed Deposits and Certificates of Deposit are excellent investment options, but their suitability depends on your investment amount, tenure, and risk appetite. FDs provide stability and long-term growth, while CDs offer higher returns over a shorter period. Analyze your financial goals and choose the option that aligns with your needs.

Looking to grow your savings faster? Ujjivan SFB offers a wide range of fixed deposit products. Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.

Disclaimer:

The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.

Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk. Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.

To know more about Ujjivan Small Finance Bank Products Visit:"https://www.ujjivansfb.in"

All intellectual property rights, including copyrights, trademarks, and other proprietary rights, pertaining to the content and materials displayed herein, belong

to Ujjivan Small Finance Bank Limited or its licensors. Unauthorised use or misuse of any intellectual property, or other content displayed herein is strictly prohibited and the same is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person’s nationality, residence or otherwise) be contrary to law or registration or would subject Ujjivan Small Finance Bank Limited or its affiliates to any licensing or registration requirements.

Apply Now

FAQs

1. What is the primary difference between an FD and a CD?

FDs cater to retail investors with low entry requirements, while CDs are designed for larger investments, often preferred by institutions.

2. Can I withdraw my FD or CD before maturity?

FDs allow premature withdrawals with a penalty, whereas CDs are transferable and can be sold in the secondary market. Ujjivan Small Finance Bank does not charge any penalty fee for withdrawals made after 6 months from the time of deposit.

3. Are the returns from FDs and CDs taxable?

Yes, interest earned on both is taxable under the “Income from Other Sources” category.

4. Who can invest in Certificates of Deposit?

Institutions, corporates, and individuals with surplus funds can invest in CDs, provided they meet the minimum investment requirement of ₹1 lakh.

5. Do FDs or CDs offer better returns?

CDs generally offer higher returns than FDs, but the risk and investment requirements are also higher.

6. Are FDs and CDs insured?

FDs in banks are insured up to ₹5 lakh under the DICGC scheme. CDs do not have such insurance.

7. Can NRIs invest in FDs and CDs?

NRIs can invest in FDs through NRE or NRO accounts. CDs, however, have restrictions depending on issuing banks’ policies.

8. What is the minimum tenure for CDs?

The minimum tenure for CDs is 7 days, similar to FDs.

9. Can I use a CD as collateral for a loan?

No, CDs cannot be used as collateral due to their transferable nature.