Cumulative FD vs Non Cumulative FD

Difference between cumulative and non-cumulative fixed deposit?

In cumulative fixed deposit, interest is compounded every quarter or year and paid at the time of maturity.

In a non-cumulative FD, interest is paid out monthly, quarterly, half-yearly, or annually, as per the investor’s choice.

Suitability:
Cumulative FDs help you build a corpus by saving a large amount.
Non-cumulative FDs help you earn regular interest payouts for meeting your daily expenses.

Cumulative FDs work best for individuals seeking to save and grow their savings.
Non-cumulative FDs work best for pensioners who seek a regular income from their savings.

Returns:
Both FDs offer better returns than a savings account.

A cumulative FD offers a higher return than non-cumulative.

Also Check: Bajaj Finance FD