Bond vs. Fixed Deposit: What's the Difference?

FinanceSide-by-sideWritten comparisonAll comparisons

Read the comparison below, or explore it visually. Create a visual lesson comparing bond and fixed deposit using available credits or plan allowance.

Both lend your money in return for interest, but to different borrowers and with different flexibility. A fixed deposit lends to a bank for a set term at a guaranteed rate. A bond lends to a government or company, pays regular interest, and can often be traded before it matures. This is general information, not investment advice.

At a glance

	Bond	Fixed Deposit
You lend to	A government or company	A bank
Return	Fixed interest (coupon)	Fixed interest rate
Tradable?	Yes — can be sold before maturity	No — locked for the term
Risk	Depends on the issuer's credit	Very low (often insured)
Price changes	Prices move with interest rates	Value doesn't fluctuate

Which should you use?

Bond

A bond can suit those wanting regular income and the option to sell early, who accept that prices move with interest rates and that company bonds carry the issuer's credit risk.

Fixed Deposit

A fixed deposit suits those who want maximum safety and a guaranteed return, and don't need the money until the term ends.

Frequently asked questions

Which is safer, a bond or an FD?

A fixed deposit is generally safer — returns are guaranteed and deposits are often insured. A bond's safety depends on the issuer; government bonds are very safe, company bonds less so. General information, not advice.

Can I sell a bond early?

Usually yes — bonds trade in markets, so you can sell before maturity, though the price may be higher or lower than you paid. An FD is locked, with a penalty for breaking it early.

Why do bond prices change?

Mainly because of interest rates. When rates rise, existing bonds paying lower rates become less attractive, so their prices fall — and vice versa.