Cumulative or non-cumulative FD?
Cumulative reinvests interest and pays everything at maturity, so it compounds and yields more. Non-cumulative pays monthly or quarterly income, which suits retirees living off the interest.
Calculate maturity amount and interest earned on fixed deposits. Compare quarterly, monthly, and annual compounding options.
Maturity = P × (1 + r/n)^(n×t) for cumulative FDs. Interest payout = P × r ÷ payout frequency for non-cumulative FDs.
$10,000 in a 5-year fixed deposit at 7% compounded quarterly matures at about $14,148 — $4,148 of interest, versus $3,500 with simple interest.
Cumulative reinvests interest and pays everything at maturity, so it compounds and yields more. Non-cumulative pays monthly or quarterly income, which suits retirees living off the interest.
Most banks apply a penalty of 0.5–1% off the contracted rate and pay interest only for the period held, which can wipe out most of the benefit in the first year.
Yes — FD and CD interest is generally taxed as ordinary income in the year it accrues, even on cumulative deposits where you receive nothing until maturity.