Cumulative Fixed Deposit

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Cumulative Fixed Deposit

Fixed deposits, for the longest, have been a popular investment option for investors. These are low-risk funds and provide stable returns on every invested amount. Among the various fixed deposit types, a Cumulative Fixed Deposit is one of a kind!  ‘Cumulative’ stands for a collection of objects and things. Here, the interest earned throughout the tenure of the Fixed Deposit is paid along with the principal amount on maturity of the fund. 

That simplifies - you do not receive the interest earned annually to your bank account. Rather, the entire interest amount gets added to your principal amount and is paid with the main sum on maturity. Because of the unique approach devised in a Cumulative Fixed Deposit type, investors interested in receiving a comprehensive amount rather than financial benefits at intervals are attracted to the settlement. Continue reading the article to understand more interesting details about the particular fund type.   

Maximise Returns On Cumulative Fixed DepositA Comprehensive Guide 

Compared to other fixed deposits available, a Cumulative Fixed Deposit offers higher returns. Also, here, the added interest amount fetches an even higher interest rate in the following year. Hence, you get to avail yourself of the benefits of compound interests, and the compounding continues to function until maturity. Returning to the question, ‘How to maximize your returns on the invested amount in a Cumulative FD?” there are certain points to remember. 

  • Always rely on research and professional expertise. Try to compare various options available in the market and then settle for the right institution offering adequate benefits. 
  • Look at the interest rates on Cumulative Fixed Deposit offered by various institutions. Now, settle for the one with the highest call! 
  • While finalizing the maturity date and investment amount, choose a tenure that satisfies your return goals. 
  • Remember, longer tenure offers a high-interest rate, and senior citizens always earn some extra on the invested amount.  

Well, there is no way you will have to calculate the invested amount and the returns available on your own. There are Cumulative Fixed Deposit Calculators available online, which you can use for the right cause. 

Benefits Of Cumulative FD Types

As already discussed in a cumulative FD, you can have a compounding effect on the principal amount. This is available once the interest of the first year gets reinvested in the principal amount. There are more to the list of benefits that you can avail of with the same. Continue with the list below for a clear overview:

High Overall Returns: With a Cumulative FD, you are always subjected to heavy returns across all invested amounts. That said, you can use the amount on maturity for further investments or finally materialize a life-changing goal - buy land or get your own house. 

Capital Appreciation: Because the accumulated interest gets added to the principal amount, there is an overall rise in the investment’s value. Cumulative FDs are worth every investment and grow with you over time. With each day, the FD’s value increases. 

Disciplined Approach: Once you start investing in FDs and mutual funds, you will experience a lot of clarity in your financial goals. This, with time, will help you to adjust in a disciplined approach and save most of your income without wasting it. Because in Cumulative FDs, the interest amount gets credited along with the principal and not in between, there is no way you will spend the interest amounts. Otherwise, it is prominent in non-cumulative FDs.  

Difference Between Cumulative and Non-Cumulative FDs

A part of the fixed deposit genre but opposite to the Cumulative arrangement, you have a Non-Cumulative FD Type. Here, the interest earned gets paid to the investor regularly rather than being added to the principal amount. You can choose between multiple return types! Ranging from monthly, quarterly, semi-annually, and once in a year.  

Non-cumulative FDs are common among investors who aim to treat a fixed deposit as a consistent income source. However, just because the power of compounding is not fully applied, and the interest gets pre-released rather than getting added to the principal amount, Non-cumulative FDs will earn you fewer returns compared to Cumulative ones.   

Best Cumulative Fixed Deposit Rates - 2023

Those who are salaried and have a stable source of monthly income can easily settle for a Cumulative FD investment. This will ensure a handsome return at the end of the tenure. Moving on, the list below offers a comparative overview of the best-fixed deposits in the market - the cumulative style. Here, you will find 10 interesting matches by different, set for a 3-year scheme under the cap of Rs.2 Crore.  

Bank NameInterest Rates Provided 
KTDFC6.00% to 6.25%
Fincare Small Finance Bank6.50% 
Equitas Small Finance Bank6.50% to 6.66%
Shriram City7.50% to 7.80%
Punjab and Sind Bank5.30% to 5.80%
Mahindra Finance6.20% to 6.45%
Sundaram Finance5.77% to 6.27%
Canara Bank5.45% to 5.95%
Yes Bank (Special Rates)6.25% to 7.00%
Lakshmi Vilas Bank (LVB)5.65% to 6.15%


Things turn out to be better when you work according to a fixed goal. When it is about planning it the right way in terms of your finances, Cumulative FDs are the best choice. If you love to aim big and get those rightfully materialized, this one has the ultimate source of returns kept rightfully saved for you once it is time. 

  • Who must select a Cumulative Fixed Deposit over a regular fixed deposit?

  • What does Cumulative credit in a bank stand for?

  • Is a Cumulative Fixed Deposit taxable?

  • What is the maximum investment limit on Cumulative FDs?

  • Who is eligible for a Cumulative FD?