FD monthly payout or cumulative: a Rs 10 lakh example
When you open a bank fixed deposit you usually choose between two options. In the payout option the bank pays the interest into your account at regular intervals. In the cumulative option the interest is added to the deposit and you receive everything at maturity. Which is better depends on whether you need the income now. This guide uses one example to show the difference.
What the RBI shows about deposit rates
The Reserve Bank of India's website, when we opened it on 7 November 2026 (data as at 6 November 2026), lists the term deposit rate for deposits above one year as a range of 6.00% to 6.75%. Rates differ by bank, tenure and customer type, so check the rate your bank offers. In the example below we assume 6.5% a year. This is an example figure, not an offer from any bank.
The example
Deposit Rs 10,00,000 for 5 years at an assumed 6.5% a year.
With the payout option, if we simply divide a year's interest by twelve, the interest is about Rs 5,417 a month, or Rs 65,000 a year. Over 5 years you would receive Rs 3,25,000 in interest, and your Rs 10,00,000 comes back at the end. Banks may calculate monthly payouts a little differently, so the amount credited to your account can be slightly different. The deposit receipt or the bank will tell you the exact figure.
With the cumulative option, assuming interest is added every quarter, the Rs 10,00,000 grows to about Rs 13,80,420 after 5 years. That is interest of about Rs 3,80,420. We checked this with a calculation.
The gap is about Rs 55,420. It exists because in the cumulative option your interest also earns interest, while in the payout option the interest leaves the deposit. Of course, if you invest the monthly payouts yourself, the gap can shrink, but that depends on what you do with the money.
How to choose
If you need regular money, for example to meet household costs after retirement, the payout option gives a steady monthly amount without selling anything. If you do not need the income for years, the cumulative option usually gives a larger sum at maturity for the same rate.
Two more points help. Interest from a fixed deposit counts as income, so tax may apply, and the bank may deduct tax at source; check the current rules on the Income Tax Department website instead of relying on a general figure. Also, breaking a deposit early can reduce the interest, so choose a tenure that matches when you will need the money.
Next step
Use the Gunaka FD interest payout calculator to enter your own amount, rate and tenure, and compare it with the cumulative result in the FD calculator. Gunaka gives estimates, not financial advice.
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