Cumulative fixed deposits can be described as FDs where the interest pay-out is available only on maturity of the FD. In these fixed deposits, there is no periodical interest return given to the investor on a monthly, quarterly or even annual basis. The interest you earn on cumulative FDs is compounded annually. This interest accumulates over the tenor and can be withdrawn at the end of the tenor, along with your original principal investment. Hence, a cumulative FD is perfect for investors who do not seek immediate returns and wish to acquire a lump sum amount at the end of the tenor.

A non-cumulative FD works on the opposite principle. In these fixed deposits, the interest payments are made to the investor in a periodical, steady, and timely fashion. This makes it the most sought-after investment option by retired investors, or those who seek frequent returns. Investors in this option usually get interest payments on a monthly, quarterly, or annual basis. In this scheme, investors are allowed to decide when they wish to receive their interest payments.

The Wins of Cumulative FDs

Now that you have understood what a cumulative fixed deposit is, here are some of its benefits:

The Highest Possible Returns: Since the interest rates in the cumulative fixed deposits are compounded and accumulated, you receive a matured amount that is high. The final amount comprises of the interest earned along with the principal. This is usually a significant amount and can be used for any purpose of your choice.

Cons of Cumulative FDs

  • Absence of Periodic Returns: If you are an investor in cumulative deposits, you are not eligible for periodical returns that could be acquired on a monthly or quarterly basis and can otherwise be useful for paying bills or EMIs.


Also Read: Documents Required and Eligibility Criteria For Starting a Fixed Deposit


The Wins From Non cumulative FDs

  • Offer Regular Interest Payments: This investment option offers you frequent interest payments on a regular basis. Here, investors can receive their interest payments conveniently on a monthly, three-monthly, quarterly or even yearly basis.

Cons of Non-cumulative Fixed Deposits

  • Do Not Offer Growth to Interest: Unlike cumulative deposits, these deposits offer interest payments. Hence, in this case the interest does not get compounded and accumulated. The final sum you receive would be lesser as compared to cumulative deposits.


On the whole, both types of fixed deposits come with their share of unique features and drawbacks. You can choose the one that suits your investment needs the most. For example, if you seek lump sum returns without frequent interest pay-outs, go for cumulative fixed deposits. If you seek frequent or periodic interest returns on your investment, go for non-cumulative FDs.

Bajaj Finance offers high interest Fixed Deposits with interest rates that go up to 8.10%. With easy online or offline application and high safety ratings, these FDs provide risk-free growth of your hard-earned savings.

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