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Cumulative FD and Non Cumulative Deposit

Fixed Deposits are one of the best investment opportunities because they allow investors to gain interest on their investments over a certain period of time and at a set FD rate of interest. You may have come across the terms Cumulative FD and Non-Cumulative deposit when investing in a Fixed Deposit. There are two forms of Fixed Deposits, depending on how you choose to collect the interest payments.

Those that want to invest in a Cumulative FD will have their interest compounded per year and paid out at maturity. When you invest in a non-cumulative FD, on the other hand, the interest on your deposit is paid out monthly, quarterly, half-yearly, or annually, depending on your needs.

Features of Cumulative and Non Cumulative FD

To help you understand these Fixed Deposit  forms better, here's a table that compares their features:


Cumulative FD

Non-Cumulative Deposit

Interest Payout



At maturity of Cumulative Fixed Deposit

Monthly, quarterly, hall-yearly or annual - as per investor's



Accumulation of



Done throughout the Cumulative FD tenor

Not accumulated in Non-Cumulative Deposit, as it's paid out at intervals

Periodic income

No periodic income generated in Cumulative FD

Periodic income generated throughout the tenor

Total interest



Interest earned is higher, as interest generated throughout the tenor is

added to principal, for further compounding


Interest earned is lower, and the payout amount decreases,

when payout frequency is high


Suitable for

Investors looking to grow their savings, and to create a higher corpus for

their investment goals


Investors looking to fund regular expenses, without

denting the principal


Cumulative vs Non Cumulative: Where should you invest?

Your investment criteria will determine whether you should go for Cumulative or Non-Cumulative. Cumulative FDs are best for investors who don't need daily cash flows but want to save for long-term goals like creating a retirement nest egg or short-term goals like covering a big cost. Such investors can raise enough money to finance their goals by investing in a Cumulative deposit. You can take the aid of cumulative fd calculator online at Finserv MARKETS to know more.

Investors who require regular income, on the other hand, should consider a Non-cumulative FD, which allows them to earn payouts on a regular basis. The payouts on these deposits can be seen as a replacement for normal income, making it easier for retirees to meet their monthly expenses. You can take the aid of a non-cumulative fd calculator online at Finserv MARKETS to know more.


  • ✔️What is the difference between cumulative FD and non-cumulative FD?

    Interest is compounded quarterly in a cumulative or reinvestment fixed deposit. In a non-cumulative fixed deposit scheme, on the other hand, interest is paid at predetermined intervals. Non-cumulative fixed deposit plans are also appropriate for retirees who need periodic interest payments.    

  • ✔️What is the cumulative fd meaning?

    The interest on a cumulative fixed deposit is accumulated over the lifetime of the deposit and charged at maturity. Deposits that are held for a longer period of time typically gain higher FD prices.

  • ✔️What is the cumulative deposit meaning?

    The term "cumulative" refers to an accumulation. Similarly, a cumulative fixed deposit is one in which interest is accrued or earned before the maturity period ends. The interest gained over the course of a year or term is either reinvested or added to the previous principal, raising the principal sum.    

  • ✔️Is cumulative FD better?

    Interest earned on a cumulative deposit is greater than interest earned on a non-cumulative half-yearly deposit. The main difference is that in one case, interest is paid at maturity, while in the other, interest is paid at regular intervals.

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