Most people prefer FD to invest money. The FD is usually for 7 days to 5 years, but many times it has to be broken before time. This is called premature withdrawal.
Generally people invest in FD to keep the money safe and get more returns. Its maturity period is of short duration, so people like to invest money in it. As such, FD can be run for 7 days to five years. But many times in emergency it has to be broken before time. If you are also tearing FD before maturity at the time of need, then it is important to know how much loss will be incurred if you do so.
The rules vary from the interest rate on FDs to all banks. Therefore, the penalty imposed on it for taking premature FD money is also different. Penalty up to 1 per cent is levied in a bank. So there is no charge in any of them. However, the deadline also matters for this. Usually, investors have to pay a penalty of 0.5 per cent to 1 per cent.
How much will be charged in premature withdrawal
Every bank has its own rules regarding premature withdrawal in FD. If you break FD just 7 days before maturity, then many banks do not take any charge on it. In many banks, when the FD is broken before the time, its penalty amount is charged considering the days of the FD’s maturity period. If the interest on the maturity period is more than the time of breaking the FD, then most banks charge a penalty of 1 per cent. For example, if your FD will be matured after 5 years. You will get 7 percent interest in it, but you withdraw money in 1 year. The interest then became 6.5 per cent. In this case, you will have to pay 1 percent penalty.
Maturity period interest to be less than FD dismantling
If a person has taken a FD of 2 years. At 2 years, interest will get 6 percent on maturity. At the same time, the interest on 1 year is 7 percent. That is, at the time when you are getting FD, you are getting more interest at that time, even then you will have to pay about 1 percent penalty. Although the terms and conditions of each bank are different in this regard. So before breaking FD, make sure to contact your bank branch for accurate calculation.
