When you open a Fixed Deposit, it is for a specific term. Generally, you close it upon maturity at the end of the term. If you wish to make a premature withdrawal, you must submit to the bank. Understanding this process helps you access funds when you need them. When you open a Fixed Deposit, you invest the funds for a specific period, ranging from seven days to 10 years. Based on your financial goals, you choose a comfortable tenure.
After the FD maturity period, you receive the invested principal amount, and the interest earned on Cumulative FDs. If not, you get the payout at your chosen intervals.
How do you close an FD upon maturity?
After maturity, you can withdraw the funds from your FD and transfer them to your Savings Account. You may also opt for FD renewal. If you want to withdraw it after maturity, visit the bank’s online platform, submit your FD receipt, ask the bank to close it, complete the signing process, submit your Bank Account details, and receive the funds in your account.
You can utilise the Fixed Deposit calculator to compute the estimated amount you will receive in your Bank Account. It does not consider the penalties payable to the bank. Enter the total invested amount, interest rate, and deposit tenure in years to get the total principal amount and estimated returns, which include the principal and interest earnings.
What is premature withdrawal?
If you wish to withdraw funds from your FD before maturity, you can do so. However, it reduces your gains as you may not get the interest rate decided at the time of application. Premature withdrawal results in an interest penalty, but it can be beneficial when you need to access funds urgently.
Suppose you invested Rs. 5 lakh for five years, and a medical emergency arises in your family. You can withdraw the corpus before maturity by paying a penalty and meeting the conditions.
How to close the FD Account prematurely?
In the event of early withdrawal, you need to pay closing charges to the bank, as per their policy and investment terms. You visit the bank’s online platform, log in with your credentials, select the Premature Closure of FD option, enter the details, and submit the form. It is usually much faster than the offline one. Ensure you have your FD receipt handy to access the account number while closing it.
Conclusion
FDs are considered one of the most important and risk-free investments to include in your portfolio. They include higher interest rates than Savings Accounts and offer you interest earnings according to your chosen payout frequency. It is best to keep it active until maturity. However, in case you require funds urgently, you can use the steps mentioned above to close your FD Account prematurely and pay the penalty to the bank.
