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Monday, October 18, 2021

How much loss can happen if Premature Withdrawal Of Fixed Deposit? How to calculate?

FD Pre Mature Withdrawal: Investment options that give fixed returns in India are preferred by people. Among these, fixed deposits are very popular. There is less risk in this, while returns are guaranteed. Investment in FD is not linked to the market, so there is no effect of market fluctuations in it. By the way, FD has a maturity period that you will have to deposit money for so many years. But the advantage is that money can be withdrawn even before the need. Although there is a loss of interest if you break the FD before maturity, you also have to pay some penalty on it. Which is different in different banks. In such a situation, you should know how to calculate the interest if FD is broken before time.

What happens premature Withdrawal?

The premature Withdrawal in FD allows investors to withdraw investment money before maturity if needed. Most of the time this happens in an emergency when money is needed suddenly. For this, investors have to pay a fixed amount to the bank as a penalty. It is usually in the range of 0.5 percent to 1 percent. However, some banks also provide this facility on zero penalties. At the same time, if the FD breaks just 7 days before maturity, then many banks do not take any charge on it.

Tax is levied on interest received on bank FD, RD and savings account, understand the full math here

How does interest get calculated?

Case-1: When interest on the maturity period is more than FD break time.

Example: 5 years maturity, but have to withdraw money in 1 year. There is a penalty of 1 percent for withdrawing money before time.

Investment: Rs 1 lakh
FD Tenure: 5 years
Interest on 5 years: 7 percent
Interest on 1 year: 6.5 percent

Amount on 1 year at the rate of 7 percent:
If you withdraw Rs 1,07,186 after 1 year, then the effective interest rate will be considered as 6.5 percent. At the same time, a 1 percent penalty will also be imposed on it. That is, here you will get interest at the rate of 5.5 percent.
The amount you get: Rs 1,05,614

Case-2: When the interest on the maturity period is less than the FD break time.

Example: 2 years maturity, but have to withdraw money in 1 year. But the interest on 2-year FD is less than 1-year FD. Here too, there is a penalty of 1 percent for withdrawing money before time.

Investment: Rs 1 lakh
FD Term: 2 years
Interest on 2 years: 6 percent
Interest on 1 year: 7 percent

ICICI, HDFC and Canara Bank cut interest on FDs this month, know where much interest is being received

Amount on 1 year at the rate of 6 percent:
If you withdraw Rs 1,06,136 after 1 year, then the effective interest rate will be considered as 6 percent only. At the same time, a 1 percent penalty will also be imposed on it. That is, here you will get interest at the rate of 5 percent.
The amount you get: Rs 1,05,095

SBI: This charge for breaking FD

On a retail term deposit up to Rs. 5 lakh, there is a 0.50% penalty on premature withdrawal.
More than Rs 5 lakh but less than Rs 1 crore, 1% penalty is applicable.

ICICI Bank: This charge for breaking FD

A FD of less than 5 crores or more attracts a 0.5 percent penalty on withdrawal before 1 year.
1 percent penalty for breaking FDs of more than 5 crores from 1 year to 5 years ago.
A 10-year FD of less than 5 crores and more than 5 crores, after 5 years and breaking before 10 years, attracts 1% and 1.5% interest.

HDFC Ltd reduced interest rate on FD, now 0.20% less interest on deposits

Nisha Chawlahttps://www.businesskhabar.com/
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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