Monthly payout, or let it grow?
An FD can pay out interest every month or quarter, or it can keep adding interest to the deposit and pay everything at maturity. The second kind, often called cumulative, is what the table above shows. On ₹2 lakh, it grows to ₹2,82,956 in 5 years.
With a payout FD, the interest reaches you along the way, so it does not earn more interest. The 5-year total is lower. Choose payout if someone needs the income now, like Jaspreet's parents. Choose cumulative if the money is meant to grow.
Frequently asked questions
What is the monthly interest on a ₹2 lakh FD?
At a 7% example rate, the first year's interest of ₹14,372 averages about ₹1,198 a month. A monthly payout FD usually pays a little less than this. Your bank's rate, and whether you are a senior citizen, will change the figure.
How much interest does ₹2 lakh earn in 1 year?
About ₹14,372 at 7% a year compounded quarterly, so the FD matures at ₹2,14,372. Banks quote different rates for different tenures, so the 1-year rate you get may not match the 5-year rate.
₹2 lakh FD for 3 years: what is the maturity?
Roughly ₹2,46,288 using 7% compounded quarterly, of which ₹46,288 is interest. For 2 years, the maturity is about ₹2,29,776. The exact number depends on the rate your bank offers on the day you book.
Can I break a ₹2 lakh FD early?
Usually yes, but most banks cut the interest rate slightly as a penalty when you withdraw early. So a 5-year FD that should pay ₹82,956 could pay noticeably less. Some people split the amount into two smaller FDs for this reason.
