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Earn interest up to 7.75% p.a. by investing in a Bajaj Finance Fixed Deposit | Rated CRISIL AAA/ STABLE and [ICRA]AAA(stable)

What is Premature Withdrawal of a Fixed Deposit?

In an FD premature withdrawal, a depositor can withdraw his or her fixed deposit investment before the maturity date. The premature FD closure can be done if the depositor meets any emergency financial obligations or other emergencies.

 

Some banks/NBFCs levy a penalty for premature withdrawal of FD funds, while others allow you to withdraw your cash without incurring any additional fees.

 

As a result, before withdrawing the money, you should inquire about the related fees (if any). You may also calculate your penalty charges using the online FD premature withdrawal penalty calculator offered by your bank/NBFC.

How to Break an FD Before Maturity?

You may close/break your FD prematurely by using an online or offline method. You can use your netbanking account for the same. Moreover, if you are visiting the branch of your bank/NBFc, you'll have to give the bank a signed fixed deposit receipt from each account holder. If you lose your receipt, you'll need to fill out an application form. The bank will then process the request and the funds will be sent to your personal account after this documentation is completed and submitted.

Premature Withdrawal Penalty in Top Banks

Each bank/NBFC has distinctive FD cancellation charges. Following are the details about top banks' premature FD closure charges which you may refer to have a better understanding.

1. Premature FD Withdrawal in SBI Bank

  • During the time in which you deposit the money or as contractually agreed upon, the charged interest rate will be between 0.50%-1%, lower than the relevant interest rate.

  • For a period of less than 7 days, no extra charges will be applicable.

  • For amounts up to Rs. 5 Lakhs, a penalty of 0.50% would be charged.

  • For amounts above Rs. 5 Lakhs, a penalty of 1% would be charged.

2. Premature FD Withdrawal in Axis Bank

  • If the account is terminated 15 months after its establishment or renewal on or after December 15, 2020, there would be no penalty for a deposit amount less than Rs. 5 Crores in force with a period of more than 2 years.

  • For amounts of less than Rs. 5 Crores and accounts created or renewed on or after May 1, 2014, a penalty of 1% will be levied, whichever is lower than the relevant or contractually agreed-upon interest rate.

  • For accounts registered on or after December 15, 2017, a charge of less than or equal to 25% of the FD initial principal amount will be assessed for the first partial withdrawal.

  • Each successive partial withdrawal will incur a penalty equivalent to or greater than 25% of the term deposit's initial principal amount. If the account is closed within 14 days of the booking date, the lowest of the relevant or negotiated costs will apply.

  • For amounts of Rs. 5 Crores and more, a 1% penalty will be applied below the application or the contractual rate, whichever is lower. This also applies to accounts that close within 14 days of the booking date.

  • There are no premature fixed deposit breaking charges applicable to NRE (Non-Resident External Account) deposits.

3. Premature FD Withdrawal in ICICI Bank

  • No penalty for premature closure of FD will be applicable for the period of less than 7 days.

  • For less than 1 year duration, 0.50%% surcharge would be levied on deposits of Rs. 5 Crores and above.

  • For a duration between 1 year to 5 years, a 1% penalty would be imposed on deposits of Rs. 5 Crores and above.

  • For a time period above 5 years, a 1% breaking charge would be applied on deposits less than Rs. 5 Crores and 1.50% would be incurred for values above Rs. 5 Crores.

4. Premature FD Withdrawal in HDFC Bank

  • Applicable interest rates are lower than the prevailing rate at the time of deposit or the negotiated rate, whichever is relevant.

  • The lender will levy a 1% penalty for early withdrawals, sweep-in withdrawals, and partial withdrawals. However, no penalties will be imposed for tenures of fewer than 7 days.

How to Close FD Prematurely?

In the event of any financial emergency, your FD funds can be your saviour. However, in order to do a successful premature withdrawal of a fixed deposit, you must be informed about the procedures involved in it. You can do the withdrawal using two methods, online and offline. Below are the details about the same.

1. Online Method

Here are the steps to follow.

 

  • Log into your netbanking account with your credentials.

  • Navigate to the ‘Service’ section.

  • Choose the ‘Premature Closure of FD’ option.

  • Fill in the FD breaking application form.

  • Provide the required details such as name, FD number, bank details, etc and submit it

  • Your request will be processed and FD will be closed.

  • Lastly, the amount will be transferred to your savings account.

2. Offline Method

Here are the steps to follow.

 

  • Visit the branch of your bank/NBFC.

  • Fill in the application for premature withdrawal of fixed deposit.

  • Provide details like FD number, account details, etc.

  • Submit the form along with the supporting documents.

  • Following that, the financial institution will process your request.

  • Once everything is completed, your FD will be closed and the funds will be transferred to your bank account.

Premature Withdrawal Penalty for Bajaj Finance FD on Bajaj MARKETS

The charges applicable on fixed deposit withdrawal before maturity are determined by the tenure. If no charges have been mentioned for that time period, the interest rate paid is 3% less than the lowest rate of interest at which the NBFC accepts public deposits. Apart from the top banks, NBFCs like Bajaj Finance also offer the facility of premature withdrawal of FD funds at nominal charges.

Here’s a closer look at Bajaj Finance FD’s premature withdrawal penalty.

Withdrawal Time (After Deposit)

Withdrawal Possible or Not

Received Principal Amount

Received Interest Amount

Within 3 Months

Before the 3-month lock-in period, FDs cannot be withdrawn. In the event of death, there will be an exception.

NA

NA

Between 3 to 6 Months

Yes

Yes

NA

After 6 Months

Yes

Yes

For the period for which the public deposit has run, the interest due is 2% less than the relevant amount to a public deposit.

Drawbacks of Premature FD Withdrawal

Here are a few drawbacks of premature FD withdrawal that you must be aware of.

1. Penalty

If you are doing a premature withdrawal of your FD funds, you will be imposed with additional charges. The penalty amount levied by the bank/NBFCs ranges from 0.50% to 1.00% of the interest. However, the penalty may change as per the financial institution’s policy over time.

2. Loss of Interest

In the event of premature FD closure, you will not receive the exact amount based on the rate of interest and duration of the fixed deposit, which was determined on the date the FD was booked.

3. Limited Financial Growth

People invest in FDs because they are intended to offer guaranteed returns in the form of interest on the maturity date. If you withdraw your FD funds before the maturity date, you will be exempted to receive the benefits associated with it.

4. Difficult Process

Premature withdrawal of FD is a time-consuming process. To finish the procedure, you are required to go through various phases like filling out paperwork, meeting with bank personnel, submitting documents, and so on.

Credit Card Against FD - An Alternative to Premature Fixed Deposit Withdrawal

Prematurely breaking an FD can help you in a variety of financial situations, but it also has a number of disadvantages. As a result, in this situation, a credit card may be the most cost-effective way to avoid incurring additional fees and address your economical problems.

A credit card against an FD is an option that can be your saviour. These cards are provided in exchange for a set deposit. The credit limit on these cards is normally 75-85% of the FD principal amount. This card may be obtained from the bank/NBFC where your FD is held. You may resolve your problems with the aid of this card while avoiding severe penalties.

FAQs on Premature Withdrawal of FD

  • ✔️What is a premature fixed deposit withdrawal?

    Premature withdrawal is when you withdraw your fixed deposit funds money before their maturity period.

  • ✔️Can I break my FD prematurely online?

    Yes, you can close your fixed deposit online before its maturity.

  • ✔️What is the penalty for withdrawing an HDFC fixed deposit early?

    Premature withdrawals, sweep-in withdrawals, and partial withdrawals all incur a 1% penalty from HDFC Bank. Fixed deposits with a term of 7 to 14 days, on the other hand, will not be penalised.

  • ✔️What are the regulations for withdrawing FD early?

    Each company has its own set of terms and conditions. The regulations that will be implied on your withdrawal depend upon your organisation. 

  • ✔️How can I calculate my Fd premature withdrawal penalty?

    You can use the FD premature withdrawal calculator to get an accurate result. The calculator is free of cost and available online at the bank/NBFC website. 

  • ✔️How to close FD prematurely offline?

    Below are the steps to follow.

    • Visit the branch of your bank/NBFC.

    • Fill in the application for premature withdrawal of fixed deposit.

    • Provide details like FD number, account details, etc.

    • Submit the form along with the supporting documents.

    • Following that, the financial institution will process your request.

    • Once everything is completed, your FD will be closed and the funds will be transferred to your bank account.

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