Fixed Deposit Monthly Income: Advantages and Returns

Know all the details about earning a regular income by investing in Bajaj Finance Fixed Deposit.
Monthly Income with FD
5 mins
4 January 2024

A fixed deposit (FD) is likely to be the most secure option for investment as it gives guaranteed returns. It also provides an option to earn interest at once after maturity or on a regular basis. Let us look at how you can earn monthly income by investing in a fixed deposit.

What is Fixed Deposit Monthly Income Scheme?

The Fixed Deposit Monthly Income Scheme is a way to invest money. You put a lump sum amount into a fixed deposit, and in return, you get a regular monthly income. This income comes from the interest earned on your investment. It's a good choice if you want a steady and predictable monthly income from your fixed deposit.

Earn monthly income with a non-cumulative deposit.

There are two kinds of schemes under fixed deposit – cumulative and non-cumulative schemes.
In cumulative FD, you can invest lump sum money over a specific period and avail of returns (principal+interest) after maturity. Returns are generally higher in the case of cumulative FD.

In non-cumulative FD, you can earn a regular payout basis your investment. At the time of application, you can choose the payout frequencies as monthly, quarterly, half-yearly, or yearly. This option is best suitable for people who rely on a regular income to achieve their financial goals, such as senior citizens.
The tenure for a non-cumulative FD ranges 12-60 months. You can calculate the returns on non-cumulative FD using an FD calculator as follows:
a. Select the type of citizen i.e., senior citizen or customer below the age of 60
b. Select the investment amount
c. Select the tenure
d. Select the payout frequency as monthly, quarterly, half-yearly, or yearly

FD calculator is the best tool to foresee the returns you can earn in future and plan your investments accordingly.

What are the advantages of a non-cumulative FD?

If you want to invest your money and want interest as a regular payout in future, non-cumulative FD is the most suitable option. For instance, if a person is about to retire in 2-3 years and has no other source of income to rely on post-retirement. They can invest in non-cumulative FD and select payout frequency as monthly. They can then enjoy monthly income once their FD gets matured.

Let us understand via an example. Kapil is 57 years old and will be retiring after 3 years. He has no other income source after that to meet his basic financial expenses. He wants to invest Rs. 5,00,000 in something that would not only grow his savings but help him earn a monthly income to meet his financial need.

Use an FD calculator to check how much return he will get after investing Rs. 5,00,000 in FD for 3 years. Selecting the monthly payout option, you can find that the interest applicable on the FD is 7.77% p.a. The total interest earned would be Rs. 1,16,550, and the total maturity amount will be Rs. 6,16,550.

What are the returns in a non-cumulative FD?

Just like a normal FD interest rates, it also comes with attractive interest rates: 

FD rates for customers below the age of 60

Fixed Deposit annualised rate of interest for customers below the age of 60 is valid for deposit of up to Rs. 5 crore (02 Jan, 2024)

Bajaj Finance Digital FD

New Product Launch
Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
42* 8.60% 8.28% 8.34% 8.42% 8.60%

Customers below the age of 60 – Special Period

Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
15* 7.45% 7.21% 7.25% 7.32% 7.45%
18* 7.40% 7.16% 7.20% 7.27% 7.40%
22* 7.50% 7.25% 7.30% 7.36% 7.50%
30* 7.45% 7.21% 7.25% 7.32% 7.45%
33* 7.75% 7.49% 7.53% 7.61% 7.75%
44* 8.35% 8.05% 8.10% 8.18% 8.35%

Customers below the age of 60 – Regular Period

Tenure in
months
At maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half yearly (p.a.) Annual (p.a.)
12 - 14 7.40% 7.16% 7.20% 7.27% 7.40%
>15-23 7.50% 7.25% 7.30% 7.36% 7.50%
24 7.55% 7.30% 7.35% 7.41% 7.55%
25-35 7.35% 7.11% 7.16% 7.22% 7.35%
36 - 60 8.05% 7.77% 7.82% 7.89% 8.05%

Senior citizens get an additional up to 0.25% p.a. rate benefit.

Eligibility Criteria for FD Monthly Income Scheme

  • The account holder must be at least 18 years old.
  • Minors can open the account with the help of their guardians.
  • Joint accounts can be opened under this scheme.
  • The account can be opened by Hindu United Family (HUF), any association or institute, and NRIs.

Taxation on Fixed Deposit Monthly Income Scheme

  1. The fixed deposit account offers tax exemption up to Rs. 1,50,000 in a financial year if you invest in a tax saver fixed deposit account 1.
  2. The bank deducts TDS of 10% if the monthly income or return exceeds Rs. 40,000 in a financial year.
  3. For senior citizen 10 % TDS will be charges if the monthly income or return exceeds Rs. 50,000.

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

Investment Calculator
SIP Calculator FD calculator SDP calculator Gratuity Calculator Lumpsum Calculator Step Up SIP Calculator

Frequently asked questions

How to earn monthly income from FD?

Bajaj Finance Fixed Deposit are of two types based on the interest payout frequency:

  • Cumulative fixed deposit: The interest and investment amount is paid at maturity.
  • Non-cumulative fixed deposit: Principal amount is paid at maturity, and interest is paid on monthly, quarterly, half-yearly, or yearly basis.

To earn monthly income from FD, choose the non-cumulative fixed deposit for a monthly payout frequency. Check the FD rates for monthly income from FD.

Is it possible to obtain monthly interest on an FD?

Yes, many banks and NBFC’s offer Fixed Deposits (FDs) with monthly interest payouts.

How can I find out how much money I have in a fixed deposit each month?

Most banks and NBFC's like Bajaj Finance offers 'Fixed Deposit Calculator', an online tools which helps investors calculate their monthly interest earnings accurately.

Is the interest on fixed deposits taxable on a monthly basis?

Yes, Interest earned on fixed deposits are generally taxable.

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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.