Difference between cumulative and non-cumulative fixed deposit

In cumulative fixed deposit, interest is compounded every quarter or year and paid at the time of maturity.

In a cumulative fixed deposit FD, interest is paid out monthly, quarterly, half-yearly, or annually, as per the investor’s choice.

Difference

  • 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.
  • A cumulative FD offers a higher return than non-cumulative.

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