Can I Get Monthly Interest on Fixed Deposit?

Curious about Can I get monthly interest on FD? Yes, you can get monthly interest on a Fixed Deposit (FD) in India. Banks and financial institutions offer a variety of interest payout options to cater to different needs, and a monthly interest payout is one of them.

Can I Get Monthly Interest on Fixed Deposit?

Here’s how it works:

• Cumulative Option: In this option, the interest is compounded quarterly or annually and paid out at the end of the FD tenure. This is suitable for those who do not need regular income and prefer to receive a lump sum at maturity.

• Non-Cumulative Option: This option allows you to receive the interest at regular intervals—monthly, quarterly, half-yearly, or annually. The monthly interest payout is ideal for those who want a regular income, such as retirees.

Under the monthly interest payout option, the interest earned on your FD is credited to your savings account or a specified account at the end of each month. The principal amount remains locked in for the FD tenure, while you enjoy the regular interest income.

• Calculation: The interest for the monthly payout is calculated based on the applicable FD interest rate. However, since the interest is being paid out regularly, it is slightly lower than the cumulative interest option because the benefit of compounding is not fully realized.

This option provides a steady source of income, making it ideal for retirees or those who rely on interest income for monthly expenses.

• Safe and Predictable: Fixed Deposits are one of the safest investment options, offering assured returns. The monthly interest payout provides predictability, as you know exactly how much you will receive each month.

When you open the Fixed Deposit, you can select the monthly interest payout option. Ensure to specify this choice in the FD application form.

• Bank Communication: Confirm with your bank how the interest will be credited—usually, it is transferred directly to your linked savings account.

Be aware that the interest rate for a monthly payout may be slightly lower compared to cumulative deposits due to the absence of compounding benefits.

• Tax Implications: Interest earned from Fixed Deposits is taxable, and the bank will deduct Tax Deducted at Source (TDS) if the interest exceeds a certain threshold.

You can receive monthly interest on a Fixed Deposit in India by opting for the non-cumulative interest payout option. This provides regular income, making it a suitable choice for those who need a steady cash flow. However, be mindful of the slightly lower interest rates and tax implications.

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I am planning to invest in fixed deposits (FD), but I am unsure: can I get monthly interest on fixed deposit? When I asked about it with my banker's friend, he said that it would depend on the terms and conditions that the financial institution providing the fixed deposit had set.

Can I Get Monthly Interest on FD?

People who want to invest their money and get a consistent return are drawn to fixed deposits. My friend went on to say that fixed deposits normally give interest at the conclusion of the investment term. It might be anywhere from a few months to a few years. Moreover, a monthly interest payment option on fixed deposits could be provided by certain banks and financial institutions. 

He further said that there are primarily two ways to receive interest.

• One is the cumulative option, in which interest is paid when the FD matures or is automatically renewed and compounded on a quarterly basis. 

• The alternative is a non-cumulative option that matures with payments made in the form of quarterly or monthly interest.

I hope this answers your query of can we get monthly interest on FD.

It is best to find out about the particular rules and possibilities offered by your bank or financial institution if you would also like to receive monthly interest payments on a fixed deposit.