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Non-Cumulative Fixed Deposit

Looking for a fixed deposit that lets you choose your interest earning? Non-cumulative fixed deposits hand out interest as and when selected by you. This can be monthly, annually or even quarterly.

Read on to get an in-depth knowledge of non-cumulative fixed deposits and check if they are suitable investments.

Non-Cumulative Fixed Deposit: Overview

Non-cumulative fixed deposits refer to a fixed deposit type where you get your interest on a monthly, quarterly, half-yearly, or yearly basis. Unlike cumulative fixed deposits, these deposits provide you with the choice to opt for the payout frequency at the time of filling out the application form. Due to the increase in the frequency of the payout of interest, your maturity amount will decrease. Investors can choose between cumulative and non-cumulative schemes depending on whether they desire a consistent income.

Interest is paid at set intervals under a non-cumulative fixed deposit plan. Therefore, non-cumulative fixed deposit plans are appropriate for seniors who require monthly interest payments. Non-cumulative fixed deposits can be better understood with the following example.


Suppose INR 1 lakh is invested by you in a non-cumulative plan with 10% per annum as the interest rate. The tenure is five years, and the payout frequency of interest is opted to be paid every quarter. You will receive INR 2500 when the interest is paid every quarter.

Suitability of a Non-Cumulative Fixed Deposit

People who want monthly interest payments into their bank accounts might consider non-cumulative fixed deposits. Consider investing in non-cumulative fixed deposits if you want to earn a stable income from your assets. This includes retirees, independent contractors, and stay-at-home moms. Simply put, if you want regular income from your savings, this fixed deposit scheme is ideal.

Frequently Asked Questions (FAQs)

What is a better FD scheme between cumulative or non-cumulative FD?

Cumulative FD pays out interest on the maturity date, whereas non-cumulative FD hands out interest monthly, quarterly, half-yearly or yearly as the investor chooses. Cumulative FD is suitable for people earning salaries or looking for stable profits. Non-cumulative FD is better for homemakers, freelancers, pensioners etc.

What do you mean by non-cumulative?

Non-cumulative fixed deposit hands out interests on a monthly, quarterly, half-yearly or annual basis.

What are cumulative deposits?

Cumulative deposits are an accepted lump sum amount at an agreed-upon interest rate for a set time. The interest payment is made along with the principal amount when the deposit matures. Every quarter, the principal amount is increased by the accrued interest.