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Premature withdrawal of fixed deposit

Premature withdrawal of Fixed Deposit

Fixed deposits are amazing and one of the most preferred ways to secure your funds for the long term. It is extremely safe, and risk-free when compared to other financial instruments and the returns are attractive as well. The amount gets locked up for a fixed tenure, which earns interest. The whole amount along with the interest is handed over to the customer when the term ends. However, at times, people suddenly end up needing their fixed deposit amount even before it has matured. In such a scenario, they will have to opt for a premature withdrawal of a fixed deposit.

Want to know more about this process? Here is a blog that will help you out.

Why choose a premature withdrawal of a fixed deposit?

These are some of the reasons for a premature withdrawal:

  1. Personal reasons include family emergencies, helping out a friend in need, etc.
  2. Coming across an investment that is riskier but pays better over the longer term as well.
  3. The investor does not have much confidence in the bank or NBFC where he has submitted the amount

There can be other reasons as well, this list is not exhaustive. But let us see how to apply for a fixed deposit withdrawal before maturity.

How to close a fixed deposit online?

You can break the fixed deposit via online net banking if you have the facility to do so. Otherwise, you will have to visit the nearest bank branch with all the necessary documents to get your funds withdrawn prematurely.

How to get the application for withdrawal of a fixed deposit?

You will be asked to submit the fixed deposit receipt that you received when you transferred the funds into your FD account. Additionally, the receipt also needs to be signed by all the account holders. This process ensures that there is no foul play involved with the funds.

Sometimes, customers can end up misplacing the FD receipt that they receive from the bank. What to do in that case? The account holder has to fill up a fixed deposit account liquidation form. Once you have filled and submitted this form, the bank will process your premature withdrawal of fixed deposit and the funds will be deposited in your savings account.

Do I have to pay any penalty charges?

Unfortunately, you will be asked to pay the penalty charges if you are withdrawing the funds prematurely. Most banks usually do charge the penalty as well. The penalty charges usually vary from 0.5% to 1% of the interest rate applied on your FD amount.

However, some of the banks do end up foregoing the penalty charges if you have an emergency. Alternatively, they may also not charge any penalty if you wish to transfer the FD amount to some other scheme with the bank.

In addition to the penalty, withdrawing money from the FD early also ends up in a loss for the investor. The banks usually reduce the interest rates levied on the FD amount while returning the money. Let us take an example here to understand this better.

Consider, a person who invested a certain amount of money at a 7% interest rate per annum, for a period of 4 years. At the time, the rate of interest for the same amount deposited for a single year was 5%. Now if the person wishes to withdraw his or her amount after a year, he will only be paid an interest of 5% on his FD. Thus, it ends up being a loss for the person.

Therefore, unless absolutely necessary, withdrawing your FD amount from the bank is not advised.

Open your FD account today with Airtel Thanks!

Well, if you are looking forward to opening a fixed deposit account, then now is the right time. Download the Airtel Thanks app on your smartphone, where you will be able to open a fixed deposit account with IndusInd Bank, at a very attractive interest rate of up to 6.5% p.a.

And with the Airtel Thanks app on your phone, you can start making cashless payments, recharge mobile phone connections, utility bill payments and a lot more. You can also use Airtel Thanks as your default money transfer app, when you are out there shopping in malls, grocery stores or more. It also lets you transfer funds to your friends, family and loved ones.

Therefore, if you are looking to open a fixed deposit account, and have an app that makes payments easier, Airtel Thanks should be your way to go. Download the app today!