Fixed deposits are one of the most sought-after financial instruments in India. Millions of Indians put their life savings in fixed deposit schemes offered by banks across India. However, investors should understand the various types of fixed deposits to ensure that they get their desired results on their deposits.
Fixed deposit can be divided into two categories
What is a cumulative fixed deposit?
There is no fixed interest payable over a quarter, half-year or annually in a cumulative FD scheme in that the interest rate is compounded every quarter or year and payable at the time of maturity with the principal.
What is a non-cumulative fixed deposit?
The interest is paid on a quarterly, monthly or annual basis in non-cumulative fixed deposit schemes. Also, the interest earned monthly from your non-cumulative fixed deposits will be taxable. This scheme is most suitable for an individual who is in need of an interest payout periodically.