Some banks offer fixed deposits with a monthly interest payout option, where interest is calculated quarterly but paid monthly at a discounted rate. HDFC Bank, for example, allows depositors to choose a monthly payout if the tenure exceeds six months. This product suits retirees or those seeking regular income from their savings.
Monthly Payout FD Highlights
| Feature | Description |
|---|---|
| Tenure eligibility | Usually >6 months |
| Interest calculation | Quarterly compounding; monthly payout at a slight discount |
| Best for | Pensioners, individuals needing steady cash flow |
| Taxation | Interest added to income and taxed per slab |
Because the monthly payout rate is slightly lower than the cumulative rate, compare the effective annual yield before investing. Also, ensure that the bank credits interest on a fixed date each month. For higher returns, some investors prefer quarterly or cumulative schemes unless monthly income is essential.
