Bank FD: If you have got FD done in a bank and want to close it before completion, then you will not get the interest on Fixed Deposit, which was told to you when you got FD done. Let’s know about it in detail.
Lakhs of people prefer to have bank FDs for safe and assured returns in the country. Amid rising interest rates, banks have also increased the interest rates on fixed deposits. Since FD is made for a fixed period of 1 year or more, but when there is a need for money, many customers break the FD in between. In such a situation, they get less interest, as well as have to pay penalty on it.
If you have made an FD in a bank and want to close it before completion, then you will not get the interest on the fixed deposit, which was told to you when you made the FD.
Actually banks deduct interest on premature FD withdrawals, as well as impose penalty on the rest of the interest received. The rules of each bank may differ regarding the provisions related to interest and penalty.
According to the rules of the country’s largest public sector bank SBI, up to 1% interest is deducted for breaking FD before maturity, along with penalty is also recovered on the interest received on it.
If you make an FD up to Rs 5 lakh in State Bank of India and break it before maturity, then you have to pay a penalty of 0.50%. On the other hand, if the FD is more than 5 lakhs and less than 1 crore, then the penalty is 1%.
Suppose you have got an FD of Rs 1 lakh for a period of 1 year, on which you will get interest at the rate of 6%. If you end FD before 1 year, then you will get only 5% interest. Apart from this, a deduction of 0.50% on the interest received will also be done as a penalty. In this way you will suffer double loss and will get interest only at the rate of 4.50%.
Since money can be needed at any time in life, therefore deposits in banks have to be withdrawn in emergency. But during this period, to avoid loss related to interest, customers can adopt 2 methods.
The first is that do not get FD of the entire money at once and get several fixed deposits of small amount or get FD of short duration. If you want, you can also take a loan against FD.
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