Difference between cumulative and non-cumulative fixed deposit

In summary

Cumulative and non-cumulative Fixed Deposits serve different income requirements and financial goals.

• Cumulative interest remains invested until maturity
• Non-cumulative interest provides periodic income payouts
• Cumulative deposits benefit from interest compounding
• Payout frequency affects the applicable rate
• Both options follow selected fixed tenures

Compare the maturity requirement, regular expenses, applicable rate, and tax treatment before selecting either option.

What is a cumulative fixed deposit?

A cumulative Fixed Deposit reinvests the interest earned during the tenure and pays everything at maturity. Interest gets added to the principal at the applicable compounding interval. Future interest is then calculated on the increased amount. This compounding effect can support goals requiring a lump sum, including education, home improvements, or planned purchases.

A cumulative Fixed Deposit may suit:

• Salaried individuals who do not need regular payouts
• Investors saving towards a future financial goal
• People seeking the benefit of compounding
• Investors comfortable waiting until maturity

• Senior citizens building a future financial reserve

  
  

Cumulative FD example

Suppose a senior citizen invests Rs. 3 lakh in a Bajaj Finance cumulative Fixed Deposit.

The maturity amounts are illustrative and assume annual compounding. Actual returns depend on the selected tenure and prevailing booking rate. Current senior citizen cumulative rates are 6.95% for 12–17 months and 7.20% for 18–30 months. The rate is 8.15% p.a. for tenures ranging from 31 to 60 months. These rates apply from 1 May 2026.

A non-cumulative FD pays interest regularly instead of adding it to the principal. Bajaj Finance Fixed Deposit offers monthly, quarterly, half-yearly, or annual payout frequencies.

This option may suit:

• Retired individuals managing monthly expenses
• Investors seeking regular interest income
• Homemakers requiring predictable cash flow
• People with recurring financial commitments
• Investors who do not want interest locked until maturity

Since interest is paid regularly, it does not remain invested for compounding. The applicable rate also varies by payout frequency.

Non-cumulative FD example

Suppose a senior citizen invests Rs. 3 lakh and chooses monthly interest payouts.

The figures are calculated before applicable TDS and taxation. Actual monthly payouts may vary because of rounding and deposit conditions.

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.

The main difference between cumulative and non-cumulative Fixed Deposits is when and how interest reaches the investor.

Neither option is automatically better. The suitable choice depends on your cash-flow requirement and financial goal.

Choose a payout frequency matching your income requirements. Start investing in Bajaj Finance Fixed Deposit.

How is interest credited?

Interest credit depends on whether you select a cumulative or non-cumulative Fixed Deposit.

Interest credit for cumulative deposits

• Interest is calculated at the applicable cumulative rate.
• Earned interest remains invested during the tenure.
• Compounding increases the amount used for later calculations.

• Principal and accumulated interest are paid at maturity.

  
  

Interest credit for non-cumulative deposits

• Interest is calculated using the selected payout rate.
• Payments follow the chosen monthly, quarterly, half-yearly, or annual frequency.
• The principal generally remains unchanged throughout the tenure.
• The principal is returned when the deposit matures.

Interest income remains taxable under applicable rules, even when a cumulative deposit pays everything at maturity.

Use the FD Interest Calculator to compare different payout options and estimated returns.

How to decide which FD to choose?

Choose your Fixed Deposit type by matching the payout structure with your financial requirement.

Ask these questions before deciding:

1. Do you need regular income during the tenure?
2. Can you leave the interest invested until maturity?
3. Is your goal a future lump sum?
4. Which payout frequency matches your expenses?
5. What post-tax amount will you receive?
6. Could premature withdrawal affect your plan?

If regular income is unnecessary, a cumulative option may support a larger maturity amount through compounding.

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?

Careful planning can help protect your expected Fixed Deposit returns and improve liquidity management.

• Compare payout rates: At-maturity and periodic payout rates differ.
• Match the tenure: Select a period aligned with your financial goal.
• Consider cumulative growth: Keep interest invested when regular income is unnecessary.
• Use FD laddering: Divide money across different maturity dates.
• Avoid premature closure: Early withdrawal may reduce payable interest.
• Review post-tax returns: TDS and taxation can affect actual earnings.
• Check credit ratings: Review the issuer’s latest credit safety ratings.
• Maintain emergency savings: Keep accessible money outside long-term deposits.
• Use nomination: Add a nominee while opening the deposit.
• Compare maturity values: Use an FD calculator before investing.

With high safety ratings and flexible options, Bajaj Finance Fixed Deposits are built to support your financial plans—big or small. Start investing today!

Conclusion

Cumulative and non-cumulative Fixed Deposits differ mainly in their interest payout structure. A cumulative Fixed Deposit reinvests interest and pays a lump sum at maturity. It may suit investors saving for future goals. A non-cumulative Fixed Deposit pays interest regularly. It may suit retirees or investors managing recurring expenses. Compare the payout frequency, applicable rate, tax impact, and liquidity requirements before choosing either option.

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