In cumulative fixed deposit, interest is compounded every 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
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