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Cumulative Fixed Deposits
A Cumulative Fixed Deposit is a type of bank deposit in which the interest is accumulated over the tenure of the deposit. This means that the interest is not paid out periodically but is added to the principal amount and is paid out at the end of the deposit tenure. This makes cumulative fixed deposits a good option for those who want higher returns on their deposits.
A fixed deposit is an essential financial tool that can be used to build wealth. In this blog, we will look at different types of fixed deposits, their interest rates and everything you need to know about these financial instruments.
What is a Cumulative Fixed Deposit?
Cumulative Fixed Deposits are a type of investment where the interest is accumulated over the deposit’s life. This makes them a suitable investment for those who want to grow their money over time.
The main advantage of cumulative fixed deposits is that they offer a higher interest rate than regular savings accounts. This means that your money will grow at a faster rate.
Additionally, the interest is paid out at the end of the term, so you will not have to worry about reinvesting it.
The interest earned on the account is reinvested back into the account so that, over time, your investment grows at an increasing rate. This can be a great way to boost your savings, especially if you can lock in a high-interest rate. However, it’s important to remember that you won’t be able to access your money during the fixed term, so you’ll need to make sure you have other savings available for emergencies.
Suitability of Cumulative Fixed Deposits
Cumulative Fixed Deposits are suitable for people looking for a safe investment option with guaranteed returns. It is also ideal for people who want to earn higher interest rates than what is offered on regular savings accounts. However, cumulative fixed deposits come with a few risks. For example, you will likely incur a penalty if you need to withdraw your money before the maturity date. Additionally, your interest earnings may be taxable.
Best Cumulative Fixed Deposit Rates 2022
A Cumulative Fixed Deposit is an essential financial tool that can be used to generate wealth over a period. The following is a list of the best Cumulative Fixed Deposit Rates for 2022.
| Bank Name | Regular Interest Rates | Senior Citizen Interest Rates |
| Shriram City | 6.54% | 6.54% |
| Mahindra Finance | 6.20% | 6.45% |
| Yes Bank | 6.50% | 7.00% |
| Sundaram Finance | 6.61% | 7.11% |
| Canara Bank | 5.70% | 6.20% |
| IndusInd Bank | 6.00% | 7.25% |
| Syndicate Bank | 5.75% | 6.25% |
| Deutsche Bank | 7.00% | 7.00% |
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Frequently Asked Questions
What is better, a Cumulative or a Non-Cumulative FD?
There is no simple answer to this question as it depends on individual circumstances. Some people may prefer cumulative FDs because they provide a higher interest rate, while others may prefer non-cumulative FDs for their flexibility.
What is the difference between cumulative and non-cumulative fixed deposits?
Cumulative fixed deposit is a type of deposit in which interest is accumulated over the tenure of the deposit. Non-cumulative fixed deposit is a type of deposit in which interest is paid out at the end of the deposit tenure.
The main difference between the two is how interest is paid out. The interest is reinvested and added to the principal amount in a cumulative fixed deposit. In a non-cumulative fixed deposit, the interest is paid out at the end of the deposit tenure.
How is cumulative fixed deposit calculated?
The interest earned on a cumulative fixed deposit is calculated on the principal plus the interest reinvested. This means the interest made compounds over time, resulting in a higher return on investment than a non-cumulative fixed deposit.
Which banks offer cumulative FD?
Most banks and NBFCs offer cumulative fixed deposits in India. You may contact the bank branch for more details.
