FD Interest Frequency
Definition
How often an FD pays interest — monthly/quarterly/annual payout (non-cumulative) for income, or cumulative (compounded, paid at maturity) for the highest maturity value; the rate is usually the same, the difference is reinvestment.FD interest frequency is the payout option you choose on a fixed deposit. A non-cumulative FD pays interest out at a set frequency — monthly, quarterly or annually — giving regular income but no compounding. A cumulative FD keeps the interest in the deposit, compounds it (usually quarterly) and pays the whole amount at maturity, producing the highest maturity value. The stated interest rate is usually the same; the difference is whether interest is paid out or reinvested. Interest is taxable either way, and a cumulative FD's interest is taxed as it accrues each year, not only at maturity.
Related guides
Related terms
- Fixed Deposit (FD) — A deposit that locks a sum with a bank for a fixed term at a pre-agreed interest rate.
- Compound Interest — Interest calculated on both the principal and previously accumulated interest.
- FD Taxation — FD interest is fully taxable at your slab rate under Income from Other Sources; TDS is 10% (20% without PAN) above the FY2025-26 thresholds; tax-saving FDs give an 80C deduction on the deposit but the interest stays taxable.
Definitions are general and educational — not advice. Verify current rates, limits and thresholds with the provider or the RBI/SEBI before acting. See our editorial policy.