Term Deposits Vs. Fixed Deposits: Know the Difference

May 01, 2025

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Rohan, a young professional, is looking for a safe place to park his savings. He wants guaranteed returns but is torn between two options—Term Deposits (TDs) and Fixed Deposits (FDs). While researching, he comes across conflicting information. Some say they’re the same, while others point out subtle differences.

If you’ve ever found yourself in Rohan’s shoes, wondering whether TDs and FDs are just different names for the same thing or if they offer distinct benefits, you’re not alone! In this blog, we’ll decode the concept of FDs and TDs, helping you choose the right investment option based on your financial goals. Let’s dive in!

When it comes to secure investment options, Term Deposits (TDs) and Fixed Deposits (FDs) are among the most popular choices for Indian investors. However, many people get confused between these terms. Are they the same, or do they have key differences? This blog will break it down in a simple and engaging way, helping you make an informed decision.

What is a Term Deposit?

A Term Deposit is a broad category of deposits where you invest a sum of money for a specific period, earning interest at a fixed rate. It includes Fixed Deposits (FDs), Recurring Deposits (RDs), post office deposits, foreign currency deposits, etc.

Key features of Term Deposits:

Money is locked in for a specific period.
Interest rates are fixed for the entire tenure.
Premature withdrawals may attract a penalty.

What is a Fixed Deposit?

A Fixed Deposit (FD) is a type of Term Deposit where you invest a lump sum for a fixed period and earn a predetermined interest rate.

Key features of Fixed Deposits:

You deposit a lump sum amount once.
The interest rate is fixed for the entire tenure.
You can choose interest payouts (monthly/quarterly) or get the entire amount with interest at maturity.
Premature withdrawals may be allowed but with a penalty.

Key Differences Between Term Deposit and Fixed Deposit

Feature	Term Deposit	Fixed Deposit
Definition	Broad category including FD and RD	A specific type of term deposit
Deposit Type	Can be a lump sum (FD) or periodic payments (RD)	Always a one-time lump sum deposit
Interest Payout	Depends on the type of deposit	Monthly, quarterly, or at maturity
Flexibility	More flexible (includes both RD & FD)	Less flexible compared to RD
Premature Withdrawal	Possible but with a penalty	Possible but with a penalty
Best for	Those looking for both lump sum and periodic savings	Those who prefer a one-time investment for a fixed period

Final Thoughts

Both Term Deposits and Fixed Deposits are excellent investment options, especially for risk-averse investors. Choose the type of deposit that suits your financial goals.

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.

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FAQs

1. Are Fixed Deposits and Term Deposits the same?

No, Fixed Deposits are a type of Term Deposit. Term Deposits also include Recurring Deposits (RDs), post office deposits, etc.

2. Can I withdraw money before maturity in an FD or Term Deposit?

Yes, but premature withdrawal may attract a penalty, and the interest earned may be lower.

3. Is FD safer than a Term Deposit?

Both are equally safe, as they are backed by banks and financial institutions.

4. Can I get a loan against my Fixed Deposit?

Yes, banks offer loans against FDs, usually up to 90% of the FD value.

5. What is the minimum amount required to open a Term Deposit?

The amount varies by bank, but most banks allow Term Deposits starting from ₹1,000.

6. Do senior citizens get extra benefits in FDs?

Yes, senior citizens are eligible for additional interest rates of 0.50%*.

7. Are FDs taxable?

Yes, FD interest is taxable as per your income tax slab. However, tax-saving FDs under Section 80C provide tax benefits.

Disclaimer

Term Deposits Vs. Fixed Deposits: Know the Difference