Difference between cumulative and non-cumulative fixed deposit

Know the detailed difference between Non-Cumulative FD & Cumulative FD and their interest payment frequencies.
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3 mins
18-June-2025

Fixed Deposits (FDs) are a popular low-risk investment choice for many Indians—offering assured returns at fixed interest rates. But when you decide to open one, you’ll often face this question: Cumulative or non-cumulative FD—what’s the difference?

While both are fundamentally safe and interest-earning deposit options, the way you receive your returns is what sets them apart. And that can make a real difference, depending on whether you want to grow your wealth or meet regular expenses.

Let’s break it down.

What is a cumulative fixed deposit?

A cumulative fixed deposit gives you a lump-sum return at the end of your FD tenure. That’s because the interest earned isn’t paid out during the term—it’s reinvested (compounded) every cycle, adding to your principal. So, by the time your FD matures, your returns are significantly higher.

If you’re saving up for long-term goals—like buying a house, funding your child’s education, or planning a major purchase—a cumulative FD helps you grow your savings silently and steadily.

Example:
If a senior citizen invests Rs. 3 lakh in a cumulative FD with Bajaj Finance:

Tenure

Interest Rate (p.a.)

Maturity Amount (Rs. )

12 months

6.95%

3,20,850

15 months

7.10%

 

3,27,050

24 months

7.30%

 

3,45,399

60 months

7.30%

4,26,697


Bajaj Finance, a leading NBFC, offers one of the highest interest rates, up to 7.30% p.a., on its Fixed Deposit. Open an FD Account now!

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Up to 0.35% p.a. extra interest offered for senior citizens
  5. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

By proceeding, you agree to our Terms and Conditions

What is a non-cumulative fixed deposit?

In contrast, a non-cumulative FD lets you earn regular payouts from your deposit. You can choose to receive interest monthly, quarterly, half-yearly, or annually—based on your needs.

This option is ideal if you’re looking for a steady stream of income. For example, retired individuals often use non-cumulative FDs to fund daily expenses. Freelancers or homemakers with no fixed income may also benefit from regular interest payouts.

Example:
If a senior citizen invests Rs. 3 lakh in a non-cumulative FD with monthly payouts:

Tenure

Interest Rate (p.a.)

Total Payout (Rs. )

12 months

6.74%

3,20,220

15 months

6.88%

 

3,25,842

24 months

7.07%

3,42,420

60 months

7.07%

 

4,06,050


Earn higher returns on long-term goals with a cumulative FD from Bajaj Finance, your interest is reinvested, helping your money grow faster over time. Check rates and start with just Rs. 15,000.

Cumulative vs Non-Cumulative FD: What’s the core difference?

Particulars

Cumulative FD

Non-Cumulative FD

Interest payout

Paid on maturity

Paid monthly, quarterly, half-yearly, or yearly

Reinvestment

Yes – interest is compounded

No – interest is paid out regularly

Income flow

Lump sum at maturity

Steady income throughout the tenure

Best suited for

Long-term savers and salaried individuals

Retirees, homemakers, freelancers

Interest rate

Usually higher

Slightly lower than cumulative

 

Choose your payout style—your FD, your way!
Opt for flexible payout options with Bajaj Finance non-cumulative FD to align with your income needs. Start investing and get up to 7.30% p.a. returns.

How is interest credited?

  • In a cumulative FD, interest is compounded and added to the principal, increasing your total returns by the end of the tenure.
  • In a non-cumulative FD, interest is credited to your account periodically and not reinvested—helping you maintain liquidity.

Use the FD Interest Calculator to see how much you can earn with either option.

Fixed deposit variants

Highest Credit Ratings | Trusted with over 1.4 million Deposits | Assured Returns on FD
Recommended

Fixed Deposit - 60 Months

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Senior Citizen

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Age below 60

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Minor

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - HUF

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Sole Proprietor

INTEREST RATES UP TO
6.95% p.a.
Open FD

How to decide which FD to choose?

Before choosing, ask yourself three key questions:

  1. Do I need a regular income or a lump sum at maturity?
  2. What are my monthly expense patterns?
  3. Am I saving for a long-term goal or looking to fund short-term needs?

If you don’t need monthly payouts, cumulative FD is a better choice thanks to its higher compounding power. But if regular income is important to you, a non-cumulative FD keeps your cash flow intact.

Payouts that match your lifestyle. Whether you need monthly income or want to grow wealth for the future—our FDs are designed to match your financial journey. Check eligibility.

How to maximise your FD returns

Regardless of which FD you choose, here are a few smart ways to make the most of your investment:

  • Invest a larger amount – More principal, more interest.
  • Choose a longer tenure – Compounding works best over time.
  • Go cumulative if possible – Earn interest on interest.
  • Use laddering – Stagger FD tenures to keep some funds liquid.
  • Avoid premature withdrawal – It may reduce your returns.

Secure your future with one of India’s most trusted FDs
With high safety ratings and flexible options, Bajaj Finance Fixed Deposits are built to support your financial plans—big or small. Start investing today!

Pro tip

Bajaj Finance offers attractive Fixed Deposit interest rates of up to 6.95% p.a. for non-senior citizens, and up to 7.30% p.a. for senior citizens, inclusive of an additional rate benefit of up to 0.35% p.a.

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Conclusion

Both cumulative and non-cumulative fixed deposits offer distinct benefits. If you’re aiming for wealth creation and can hold your investment for the long term, a cumulative FD gives you better returns. But if you rely on steady income or want to support recurring expenses, a non-cumulative FD offers the flexibility you need.

Whatever your goal, make sure your money works for you. Choose a fixed deposit plan that complements your lifestyle and helps you move closer to financial freedom.

Calculate your expected investment returns with the help of our investment calculators

 

Investment Calculator

RD Calculator

SSY Calculator

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Gratuity Calculator

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Frequently asked questions

What is the meaning of a cumulative FD?

A cumulative fixed deposit (FD) is a type of fixed deposit in which interest is accumulated or reinvested back into the deposit. Since both the principal and the interest that has already been earned are taken into account, the amount on which interest is computed for the following period is increased.

Is a cumulative FD better?

In comparison to non-cumulative deposits, cumulative FDs pay higher interest rates. The primary distinction is that interest on a cumulative deposit is paid at maturity, whereas interest on a non-cumulative deposit is paid on a regular basis. Your financial objectives and needs will determine whether a cumulative or non-cumulative FD is preferable.

Is Bajaj Finance FD a safe option?

Yes. Bajaj Finance FDs are rated AAA by CRISIL and ICRA—indicating the highest level of safety and timely payments. Start investing and get up to 7.30% p.a. returns. Open FD.

How are cumulative FD interest credits calculated?

When it comes to cumulative FDs, interest credits are paid out through an FD account at the end of the investment tenor.

How is non-cumulative interest credited for fixed deposits?

Depending on the payout frequency you select for non-cumulative FDs, the interest credits are transferred to you on a regular basis. This could be a non-cumulative deposit interest that is paid monthly, quarterly, half-yearly, or annually.

What is the benefit of non-cumulative FDs?

The frequency of interest payouts is the main advantage of non-cumulative FDs. For people who want a consistent inflow of cash through consistent interest payments, this is fantastic.

What is an example of cumulative FD?

Here is one instance. You put Rs. 1,00,000 rupees into a yearly cumulative fixed-interest investment at a rate of ten percent. As a result, your interest payment at the end of the FD duration would be Rs. 1,10,000.

Which is better, non-cumulative FD or traditional FD?

Non-cumulative FDs are a preferable option if you want to increase your corpus and your wealth for retirement. Cumulative FDs, however, can be a wise choice if you want to dramatically increase your current savings. Though the decision is solely dependent upon your financial objectives.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.