Updated on July 18, 2023
The term “interest payout” in bank deposits refers to the periodic payment they receive on the funds deposited by them in their bank accounts. When depositors open various types of accounts like savings accounts, fixed deposits (FDs), or recurring deposits (RDs), they are eligible to earn interest on their deposited funds. The interest payout frequency and calculation methods may vary depending on the type of account.
Frequency of interest payout for different accounts
For savings accounts, depositors typically receive their interest payout on a quarterly basis. The interest is computed based on the average monthly balance in their account and is credited at the end of each quarter.
In the case of fixed deposits, the interest payout depends on the deposit’s duration. Depositors can choose to receive their interest either at maturity or at regular intervals like monthly, quarterly, or annually. Some banks may offer the option of cumulative interest, where the interest is added to the principal and paid out at maturity.
Similarly, recurring deposits follow a similar pattern. The interest is generally compounded on a quarterly or annual basis, and the payout can occur at the end of the deposit term or at regular intervals.