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Question
Give two differences between recurring deposits and fixed deposits.
Solution 1
(i) Fixed or time deposit account: Cash is deposited in this account for a fixed time period. They are not payable on demand and do not enjoy chequing facilities.
(ii) Recurring deposit account: Under this account, a specialized amount is deposited every month for a specified period say 12, 24, 36 or 60 months.
Solution 2
| Recurring Deposits | Fixed Deposits |
| In case of such deposits, an account holder has to deposit a certain fixed amount every month for a specified period. | In such deposits, the amount of the deposit can be withdrawn only after the period of time agreed upon by the bank and the depositor. |
| The rate of interest paid by the bank is higher than the savings account but less than the fixed deposit account. | The interest rate is higher in the case of such deposits. The longer the period, the higher is the interest rate. |
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