Question

Give three differences between saving deposits and recurring deposits.

Answer 1

Sr. No.	Basis of Comparison	Savings Deposit	Recurring Deposit
1.	Frequency of Deposits	The account holder can deposit any amount of money at any time based entirely on their own personal financial convenience.	The account holder must deposit a strictly fixed, identical sum of money at regular intervals (usually monthly) for a predetermined period.
2.	Rate of Interest	The bank offers a low to moderate rate of interest because the depositor can withdraw their money at any moment, forcing the bank to keep the funds highly liquid.	The bank rewards the depositor with a significantly higher rate of interest because the steady accumulation of funds provides a highly predictable pool of capital for long-term investments.
3.	Withdrawal and Liquidity	The depositor enjoys unrestricted liquidity and can withdraw funds instantly on demand using a chequebook, debit card, or digital payment without facing any financial penalties.	The depositor faces restricted liquidity as the accumulated money is only paid out upon reaching maturity, and pulling funds out prematurely results in a financial penalty.