Fixed Deposit Rules: Many times people suddenly need money after fixing money in FD, so they break it. Banks charge you a penalty for breaking FD. In such a situation, you do not get the profit that you could have got. Know what are the ways to avoid this loss?
Fixed Deposit is still one of the favorite investment options for people. The reason for this has been their trust in this scheme for a long time. In this scheme, the money of the investors remains safe, as well as guaranteed returns are available on it. Different tenures are available in FD. In the post office, the option of 1, 2, 3 and 5 years FD is available, while in the bank, the option of FD from 7 days to 10 years is available. The interest rate of all is also different.
But many times people suddenly need money after fixing money in FD, so they break it. Banks charge you a penalty for breaking FDs. In such a case, you do not get the profit that you could have got. Know what are the ways to avoid this loss?
Penalty has to be paid
If you break FDs before time, then you do not get the interest on it, which you were told when you started the FD. According to SBI rules, penalty is charged on interest on breaking FDs before maturity. If you make an FD of up to Rs 5 lakh, then you have to pay a penalty of 0.50% for breaking that FD before maturity. On the other hand, if you make an FD of more than Rs 5 lakh and less than one crore, then you have to pay a penalty of 1% for breaking it before time. Also, your interest can also be reduced by up to 1%.
How to avoid this loss
There are two ways to avoid the loss of breaking FDs before time. First, if while making an FD you know that you may need money after some time and due to lack of any other option you may have to break the FD, then it would be better to get a short-term FD. The second way is that instead of investing all the money in a single FD, get many FDs of smaller amounts.
Meaning if you have 5 lakh rupees, then get 5 FDs of 1 lakh each. This will ensure that if you ever need money and have to break the FD in between, then according to the need you can arrange money by breaking 1-2 FDs. You will keep getting interest on the remaining FDs. Apart from this, if the FD is for a long time, then instead of breaking it, you can also arrange money by taking a loan on it.
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