Fixed Deposits
FD simple vs compound interest
Simple interest is calculated on principal alone, while compound interest adds earned interest to the balance for later periods.
Simple interest
Simple interest is P × r × t. It does not earn interest on prior interest.
Compound interest
With compounding, each period's interest is added to the balance. At the same stated annual rate and tenure, more frequent compounding can modestly increase a mathematical maturity estimate.
Cumulative and non-cumulative
A cumulative FD generally reinvests periodic interest. A non-cumulative FD may pay interest out periodically, so cash flow and final maturity differ.
This guide is for general education. Rules, lender terms, bank terms and individual circumstances can change the result.
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