Premature withdrawal of a fixed deposit occurs when you withdraw an FD, either partially or fully, before its maturity date. Most banks and Non-banking Financial Companies (NBFCs) permit both partial and complete premature withdrawals of fixed deposits. 


However, some FD providers specify the penalty for early withdrawal, which varies among issuers and should be considered before investing. It's important to note that there are non-callable plans that do not allow premature withdrawals of FDs.

Premature Withdrawal Penalty Terms Among Top Banks


Premature Withdrawal Penalty (Before Maturity)

YES Bank

0.75% if tenor is less than 181 days; 1.00% if above 182 days (applicable to deposits of up to ₹5 Crores) 


0.50% for deposits up to ₹5 Lakhs; 1% for deposits above ₹5 Lakhs


0.50% for deposits of up to ₹5 Crores (less than 1 year); 1.00% for under 5 years; 1.50% for deposits over ₹5 Crores above 5 years

AU Small Finance Bank

0.50% to 1.00% depending on the deposit term


0.50% for deposits up to ₹1 Lakh; 1% for deposits above ₹1 Lakh

Premature Withdrawal Penalty Terms Among NBFCs


Premature Withdrawal Penalty (Before Maturity)

Bajaj Finance

No interest earned if withdrawn before 6 months; 2% lower interest rate than applicable rate for remaining tenor if withdrawn after 6 months

PNB Housing Finance

0.50% to 1.00% depending on deposit term

Mahindra Finance

No interest before 6 months; 2% lower interest rate after 6 months

How is Premature Withdrawal Penalty Levied?

Most banks/NBFCs may use one of the following two ways to calculate interest on premature withdrawals of fixed deposits: 

  • Case 1

Let’s say you have invested ₹1,00,000 in an FD for a period of 3 years at a rate of 5.80% p.a. Suppose the interest rate for the first year is 5.50% p.a. Now, if you decide to withdraw the amount after one year, your interest will be calculated after factoring in the issuer’s penalty rate. 


Assuming the bank levies a 1% penalty on the premature withdrawal of fixed deposits; your new interest rate is 5.50%-1% = 4.50%. The revised FD rates are lower than the original 5.80% rate. Here’s an overview of how this affects your returns:



Principal Sum Invested


Maturity Amount After 1 Year


Rate of Interest at the Time of Booking

5.80% p.a.

Effective Interest Rate

5.50% p.a.

FD Premature Withdrawal Penalty Rate


Final Interest Rate 

4.50% p.a.

Final Amount Payable 


Disclaimer: The FD rates, penalty, and returns mentioned are for calculation purposes only. Contact your issuer to better understand the penalty on your fixed deposit.

  • Case 2

Suppose you’ve booked a 1-year FD at 7% p.a. interest. However, due to some financial emergency, you decide to withdraw the amount after six months. The prevailing interest rate for a six-month FD at the time was 6.50%. 


This means that the interest payable to you will be that of a six-month FD because the interest rate for this tenor is lower than a 1-year FD. Assume that the issuer levies a 1% penalty charge on the effective interest rate for the premature withdrawal. 


The interest payable to you will be calculated as 6.50%-1% = 5.50%. The table below shows how this affects your returns.



Principal Sum Invested


Maturity Amount After 1 Year


Rate of Interest at the Time of Booking

7% p.a.

Effective Interest Rate

6.50% p.a.

FD Premature Withdrawal Penalty Rate


Final Interest Rate 

5.50% p.a.

Final Amount Payable 


Disclaimer: The FD rates, penalty, and returns mentioned are for calculation purposes only. Contact your issuer to better understand the penalty on your fixed deposit.

How Can a FD Premature Withdrawal Penalty Calculator Help?

The FD premature withdrawal penalty calculator offers the same benefit as that of an FD calculator – enabling informed decisions. Here, you enter the FD investment amount, tenor, interest rates, and effective interest rates, and in return, it gives you an estimate of your loss. 


With this estimate you can determine whether opting for premature withdrawal of FD is a good idea for your current and future finances. Additionally, a majority of issuers offer FD with premature withdrawal facility as well as a loan against FD facility.

How to Withdraw FD Prematurely

1. Online Method

By initiating an online request for the premature withdrawal of fixed deposit, you can avoid the hassle of visiting a physical branch office. Here are the steps you need to follow to register such requests online:

  • Step 1: Visit your bank or NBFC’s website

  • Step 2: Log in to the Net Banking portal using your ID and password

  • Step 3: Go to the ‘Service’ tab and select the ‘Premature Withdrawal of Fixed Deposit’ option

  • Step 4: Enter all the relevant information, like your name, FD number, etc

  • Step 5: Submit the request and wait for it to be processed

  • Step 6: After your request is processed, the money will be automatically transferred to your account

2. Offline Method

You can follow the below-mentioned steps to apply for the premature withdrawal of fixed deposits offline:

  • Step 1: Visit your bank or NBFC branch and get an application form for the premature withdrawal of your fixed deposit

  • Step 2: Carefully fill out the application form with details like name, FD number, etc

  • Step 3: Submit the form with all the supporting documents, including your FD certificate

  • Step 4: Once processed, the FD amount will be credited to your savings bank account

Read More

Tips to Avoid Premature FD Withdrawals

To steer clear of early withdrawal penalties imposed by issuers, consider these practical strategies:

  • Fixed Deposit Laddering

Embrace FD laddering as a simple way to diversify your investment portfolio. Instead of putting all your funds into one FD, spread your investment across various FDs with different maturity periods. 


A mix of long and short-term FDs reduces the risk of premature withdrawal penalties. With FDs maturing at different times, you gain liquidity windows to meet immediate needs without liquidating your long-term FDs.

  • Loan Against FD

Secure short-term liquidity by leveraging loans against FD. Many banks and NBFCs offer this option, allowing you to borrow up to 90% of your principal. Although the interest is slightly higher (usually 1%-2% more than the FD rate), it's lower than regular personal loan rates. 


Since this is a secured loan, your credit score won't impact the interest rate or loan amount. This approach prevents premature FD withdrawals while ensuring your deposited amount continues to grow at the fixed rate.

  • Invest in a Sweep-in FD

Opt for sweep-in FDs, blending the liquidity of a savings account with the high interest rates of a regular FD. Simply link your sweep-in FD to a current or savings account and set a minimum balance for your savings. 


Excess funds in the account automatically move to the sweep-in FD. Sweep-in accounts permit penalty-free withdrawals, allowing you to access your money when needed.

Credit Card Against FD - An Alternative to Premature FD Withdrawal

In case of a financial emergency, instead of resorting to premature FD withdrawal, consider availing a credit card against your FD. Such credit cards allow you to withdraw 75%-80% of your principal deposit while still earning interest. 


Most banks and NBFCs offer this facility to their customers. Additionally, secured credit cards not only assist in managing expenses without early withdrawal of your fixed deposit but also contribute to building your credit score.


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be /source of advice or recommending any financial investment advice or endorsement of any sort.

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

Read More

Frequently Asked Questions

What is premature withdrawal of a fixed deposit?

Premature withdrawal of fixed deposit refers to the partial or full withdrawals made on an FD account before its maturity.

Can I prematurely withdraw my FD online?

Yes, you can register a request for the premature withdrawal of your fixed deposit online. Simply login to your account on the issuer’s website, go to the ‘Services’ tab, and click on the ‘Premature FD Withdrawal’ option. Once you’ve filled in the application form and submitted the necessary documents, your request will be processed. 

How can I calculate the penalty for premature withdrawal of fixed deposit?

Most banks and NFBCs offer a FD premature withdrawal penalty calculator. You can use this free online tool to determine the penalties levied on the premature withdrawal of your fixed deposit.

How to withdraw an FD prematurely offline?

For an offline premature FD withdrawal, simply visit the issuer’s branch and fill out the required form. Once you’ve entered all the details of your FD, you can submit the form along with your FD certificate and other important documents. 

After the issuer has processed the request, the lump-sum amount will be transferred to your associated savings account.

Can I withdraw money from a fixed deposit before maturity?

Yes. However, premature withdrawals of fixed deposit attract certain penalty charges that vary from one financial institution to the next.

Do all banks charge the same penalty for premature withdrawal of an FD?

No, banks and NBFCs have different penalty policies and processes, and you contact the issuer to know the penalty rate applicable. The same will be mentioned on the form you fill at the time of investing.

Is premature withdrawal facility applicable for a tax-saver fixed deposit?

No, tax-saver FDs do not allow premature closure or withdrawal.

Can I continue the FD account even after premature withdrawal?

Yes, if you are making a partial withdrawal of FD before maturity you can continue to earn returns on the remaining investment amount. However, the interest rate may not be the same and the terms vary across issuers.  

Loan Offer
Download App
Credit Score