Know The Difference Between Cumulative and Non Cumulative Fixed Deposit

To grow your wealth over time, investing your money in the right and timely manner is vital. In India, when it comes to investments, Fixed Deposits are considered one of the safest and risk-free investment options as the Indian Government backs them.  

Further, the Fixed Deposit Interest Rate is quite lucrative nowadays, making it a good deal to catch! Unlike the fluctuating stock market, this investment scheme is one of the most sought-after as it offers assured returns. Also, from a flexible tenure to an easy withdrawal, it has a lot on the table to offer.

What is a fixed deposit?

As the name implies, it is a type of financial instrument that is offered by banks/financial institutions, which allows individuals to invest a fixed sum of money. Moreover, this investment is made for a predetermined period that ranges from a few months to several years. 

Moreover, the Fixed Deposit Interest Rate is generally higher than the savings accounts and is assured for the entire period of the Deposit. Therefore, when the deposit term ends, the investor gets the initial investment as well as the accumulated interest. 

What is the difference between Cumulative and Non Cumulative Fixed Deposits? 

  • Cumulative Fixed Deposit

In this type of FD, the interest amount earned is reinvested in the same account, and the total amount, i.e. the principal and the interest, is paid out at maturity. This basically means that the interest earned is not paid out periodically during the deposit tenure. However, instead, the interest here is compounded over time, ultimately resulting in a higher payout in maturity. 

  • Non-Cumulative Fixed Deposit

In a Non-Cumulative FD, the interest amount earned is paid back to the investor at regular intervals (monthly, quarterly, half-yearly, or annually). However, the principal amount here remains the same throughout the deposit tenure and only the interest earned is paid out periodically. 

Therefore, the prime difference between both of these is how the interest is paid out. 

How to invest in FD?

Investing in an FD nowadays has become relatively easy, as simple as ordering groceries. Moreover, tools such as fd calculator have made planning relatively easy for individuals. In my personal experience, I’ve used the Bajaj Finserv application to invest in the same and found it quite simple. With just a few taps, I was able to invest in FD.

  1. Download the Bajaj Finserv application.
  2. Sign up by entering your mobile number.
  3. Go to Fixed Deposit under the Investment Bazaar section.
  4. Choose as per your requirement, and you are good to go.


Keep in mind that before investing your hard-earned money, it is important to calculate FD interest. This gives you a brief idea of what you’ll be reaping from your investment when the tenure ends. Moreover, long gone are the days when in-person travel to the official bank site was necessary. Nowadays, it is all about you and your smartphone. 

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