Quarterly compounding is the common market practice, but it is a contractual term in your FD receipt, not an RBI mandate — the RBI quarterly rule applies to savings account interest. Cumulative FDs compound the interest back into the deposit and pay everything at maturity, using A = P x (1 + r/4)^(4n). Non-cumulative FDs pay interest out monthly or quarterly instead, so nothing compounds. Always read the rate and payout basis on the receipt.

Yes. Fixed deposit interest is fully taxable under Income from Other Sources at your applicable income tax slab rates. Banks deduct 10% TDS under Section 194A if annual interest exceeds ₹50,000 (₹1,00,000 for senior citizens), the thresholds in force from 1 April 2025.

Yes. Almost all Indian banks offer an additional 0.50% to 0.75% interest rate on fixed deposits for senior citizens aged 60 and above.

Pick cumulative if you do not need the money in between — interest is added back every quarter and the whole amount comes at maturity, so Rs 5,00,000 at 7% for 5 years grows to about Rs 7,07,000. Pick non-cumulative if the FD is your income source: the bank pays interest out monthly or quarterly at the same rate but nothing compounds. Most senior citizens buy the monthly-payout version to replace a salary.

The bank re-prices the deposit to the rate applicable for the period you actually held it, then deducts a penalty of about 0.50% to 1.00% from that rate. Break a 5-year FD booked at 7% after 11 months and you are paid the 6-month to 1-year card rate minus the penalty, not 7%. Some banks waive the penalty on senior citizen deposits or on FDs booked for 7 to 14 days. Check the terms before you book.

Only if you are on the Old Regime, because the new regime under s.115BAC gives no 80C deduction at all. Even then a tax-saver FD is the weakest of the three: interest is taxed every year at slab rate, so 7% nets about 4.9% at the 30% slab, against PPF at a fully tax-free 7.1% and ELSS with a shorter 3-year lock-in. The FD is locked for 5 years with no premature exit and no loan against it.

Yes, up to Rs 5,00,000 per depositor per bank under DICGC cover, and that figure includes both principal and interest. It is aggregated across every account you hold in the same bank and in the same right and capacity — savings, current, FD and RD all count together, so five FDs of Rs 3,00,000 in one bank are still covered only to Rs 5,00,000. Spreading deposits across different banks raises your covered amount.