FD vs RD vs PPF: which is better in 2026

None of the three is better for every person. A fixed deposit holds a lump sum for a term you choose. A recurring deposit takes a fixed amount every month. PPF is a small-savings account that runs for 15 years from the end of the opening year, and the payment is not taxed.

The useful comparison is the job, the rate, the lock-in, and the tax. A bigger maturity number on a 15-year product is not a win over a 5-year product. The years are not the same, and the tax is not the same.

The rates on the page today

Small-savings rates for 1 October 2026 to 31 December 2026 were left unchanged by the Ministry of Finance memorandum of 30 September 2026. PPF is 7.1% a year. The 5-year post office recurring deposit is 6.7%. The 5-year post office time deposit, the closest government cousin of a bank FD, is 7.5%.

A bank prints its own card. The FD calculator starts at 6.25%. That is SBI’s retail domestic term-deposit rate for 1 year to less than 2 years, below ₹3 crore, for the general public. The card has been in force from 15 December 2025. It is one bank’s rate, not a market average. On that same card a senior citizen is paid 0.50 percentage points more on that bucket. The calculator does not add it. Type the rate on your receipt.

Table: Rates used on this page

PPF, the post office RD and the post office time deposit can all change next quarter. A bank FD keeps the rate on the receipt until that deposit matures. Money already inside PPF earns the rate notified for each quarter, not a rate locked on the day you opened the account.

How each one grows

A cumulative bank FD compounds. The FD calculator uses whole quarters, then simple interest for a leftover shorter than a quarter. A year in the year box is 12 months. The default compounding is quarterly, which is how most bank deposits work. Interest payout, the other style, does not add the interest back. The principal returns at the end. The examples below are cumulative.

A post office recurring deposit compounds quarterly too, on each monthly instalment for the months it stays in. The RD calculator uses the formula that matches the National Savings Recurring Deposit Scheme, 2019 table. The post office term is 5 years. The minimum is ₹100 a month, in multiples of ₹10. There is no maximum. A bank RD sets its own rate and its own tenure. This page does not invent a bank RD card. 6.7% is the post office figure.

PPF does not compound monthly. A month earns interest on the lowest balance between the close of the 5th and the end of that month. The twelve slices are added, rounded to the nearest rupee, and credited on 31 March. A deposit after the 5th misses that month. The PPF calculator starts at 7.1%.

You can deposit ₹500 to ₹1,50,000 in a year, in multiples of ₹50. The account matures 15 years from the end of the financial year in which you opened it. The opening year counts, so a full term is 16 deposits if you pay in every year including the first. You can extend it in blocks of 5 years. The calculator can add those blocks. The example below does not.

Tax in both regimes

This is the split that a rate table hides. The labels are EEE and EET, but the new regime cuts the “deduction” letter off PPF.

PPF interest is not taxed each year. The maturity is dealt with under Schedule II, which was Section 10(11). Section 202 (this was Section 115BAC) does not block that exclusion. The deposit is a different question. It is Section 123 read with Schedule XV, paragraph 1(e), which was Section 80C, and only when you are not under section 202. The cap is ₹1,50,000, shared with EPF, ELSS, life insurance and Sukanya Samriddhi. In the new regime the deposit does not reduce tax. The maturity is still excluded.

A bank FD’s interest is taxed at your slab. The calculator adds 4% cess on that tax. It does not subtract TDS again. Section 393 lets a bank deduct 10% when the interest it credits in a tax year crosses ₹50,000, or ₹1,00,000 if you are 60 or older and you have given PAN. Other deposits at the same bank count toward that line. TDS is adjusted in the return.

Section 153 (this was Section 80TTA for a savings account, and Section 80TTB for a senior) is not applied by the FD page. Under 60, the ₹10,000 deduction is savings-account interest, not FD interest. A senior who is not under section 202 can deduct up to ₹50,000 of interest, including a fixed deposit. The page leaves that out because your other interest, and your regime, are not on the screen.

A five-year tax-saving bank FD, and the five-year post office time deposit, can be claimed under section 123 (this was section 80C), inside the same ₹1,50,000 cap, and only outside section 202. The interest is still taxed. The lock-in is the price of the deduction. An ordinary one-year FD is not in that basket.

RD interest is taxed too. From the income-tax department’s threshold list, a bank recurring deposit is a time deposit for TDS, on the same ₹50,000 and ₹1,00,000 lines, for the bank as a whole. A post office recurring deposit is not on that list. The interest is still income. The RD calculator reports the TDS note for a bank. It does not subtract tax from the maturity.

Three worked sums

These are three different cash flows. Read them as illustrations of each calculator, not as a race.

A bank-style cumulative FD of ₹1,50,000 at 6.25% for 5 years, compounded quarterly, matures at ₹2,04,531. Interest is ₹54,531. At a 30% slab, tax plus cess is ₹17,013, and what you keep after that tax is ₹1,87,518. The maturity itself is before tax. Someone in a lower slab keeps more. Someone inside the section 156 rebate may owe no tax on this interest if the rest of their income is low enough. The FD page does not know the rest of the return.

The same ₹1,50,000 compounded quarterly at the post office 5-year time-deposit rate of 7.5% matures at ₹2,17,492 before tax, using the FD calculator’s quarterly rule. Interest is ₹67,492. At 30% the tax plus cess in that model is ₹21,058. A post office may credit the quarterly compound on its own calendar. If your receipt says something else, use the receipt. The point of the figure is the gap versus 6.25%, before you even reach the lock-in of five years and the section 123 claim.

A post office RD of ₹5,000 a month for 60 months at 6.7% takes in ₹3,00,000. Interest is ₹56,829. Maturity is ₹3,56,829, rounded to the nearest rupee as the scheme requires. That interest is taxable. Closing a post office RD early, after three years, is a premature closure and uses the savings-account rate, which is 4% this quarter. The calculator does not run that path. The ₹3,56,829 figure is the full five years.

PPF at the yearly maximum, ₹1,50,000 by 5 April, at 7.1% for the statutory term: you put in ₹24,00,000 over 16 deposits. Interest is ₹21,17,701. Maturity is ₹45,17,701. Year 1 interest is ₹10,650, which is a full year on ₹1,50,000 because the deposit was in by 5 April. That maturity is not taxed. It also is not available as a five-year encashment. Comparing ₹45,17,701 with ₹1,87,518 and calling PPF the winner ignores the extra decade and the ₹24,00,000 you had to keep paying in.

Do the sums again on the FD calculator, the RD calculator and the PPF calculator. Change the rate if your card is not SBI’s 1-year bucket. Change the slab. Leave PPF at 7.1% until the next quarterly memorandum.

Which cash fits which account

Use a fixed deposit when you already have the lump sum and you know the month you want it back. One year, three years, five years: the bank will quote a rate for that bucket. Senior citizens should type the higher card rate, not hope the calculator adds 0.50 points. If the only reason for a five-year lock-in is the section 123 deduction, check that you are actually outside section 202. In the new regime that deduction is worth nothing, and you have still locked the money.

Use a recurring deposit when the money arrives monthly and you will not spend it. The post office rate this quarter is 6.7%, for five years, with no ceiling on the monthly amount. A bank may pay more or less, for a tenure that is not five years. The interest will be taxed. An RD is a useful parking place. It is a poor substitute for PPF if the goal is a tax-free sum in your fifties, because you will restart it, and restart the tax, every five years.

Use PPF when you can leave the money until maturity and you want the exclusion on the way out. The rate, 7.1%, is lower than Sukanya Samriddhi this quarter and lower than the post office five-year time deposit. The tax treatment is the reason it still wins for money you do not need. In the new regime you lose the deposit deduction and you keep the exclusion. That is still different from an FD, where every rupee of interest is in the slab.

If the account is for a girl under 10 and the horizon really is 21 years, Sukanya Samriddhi is the scheme with the higher notified rate. It is not a substitute for an emergency FD. The Sukanya Samriddhi guide has the rules. If the goal is a pension rather than a lump sum you can spend, NPS is a different product, market-linked, with its own exit tax. The NPS guide keeps that separate on purpose.

Figures were checked on 28 October 2026. The small-savings rates are the 30 September 2026 memorandum. The bank FD rate is SBI’s card, in force from 15 December 2025, as described on the FD page. Tax sections are the Income-tax Act, 2025, for FY 2026-27. A return for FY 2025-26 still says 80C, 80TTA and 80TTB where this page says section 123 and section 153.