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Normally, Fixed Deposits are broadly classified into two different types, TDR (Term Deposit Receipt) and STDR (Special Term Deposit Receipt). The primary difference between both depends on the cumulative nature of the interest payout.

Term Deposit Receipt

This Fixed Deposit is known as a cumulative Fixed Deposit. This kind of Fixed Deposit has a minimum tenure of 7 days and a maximum tenure of 10 years. The interest payout is credited to your savings bank account linked with the fixed deposit account at a fixed date. The said payout can be withdrawn for use at your convenience. Thus, in TDR, the interest component is paid out to the depositor at regular intervals, like on a monthly, quarterly, semi-annual, or annual basis as per the investor’s choice.

Special Term Deposit Receipt

In STDR, which is also known as non-cumulative Fixed Deposit, the interest component is paid out only along with the principal amount at the time of maturity of the fixed deposit. It is called special because the interest earned on STDR is reinvested in every quarter. This kind of reinvestment helps you to reap the benefits of compounding. Unlike in TDR, STDR has minimum deposit tenure of 6 months. The maximum tenure can go up to 10 years.

Returns Comparison

The return on STDR is more than TDR due to the power of compounding. Tenure has no impact on TDR. However, in the case of STDR, a longer tenure means higher returns as the interest is reinvested until maturity.

Which One Is Better?

When the return on investment is the primary parameter, STDR is better than TDR as STDR gives higher returns. However, the choice between STDR and TDR is based on individual requirements. For those who require regular income from their Fixed Deposit Corpus such as pensioners, TDR is the ideal option. For those who want to build their wealth through a minimum risk fixed-income security, STDR is the ideal option. Nowadays banks such as SBI offers fixed deposit through their Online Banking through which a Fixed Deposit can be created in a matter of seconds. The online options in SBI to avail fixed deposits are known as e-TDR and e-STDR.

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