February 20, 2019

How to withdraw funds from a premature fixed deposit

Emergency situations like a medical crisis, a job loss, an unplanned overseas travel or vital home repairs call for immediate financial liquidity. If you do not have an emergency fund or when your savings are insufficient to meet costs, you may consider breaking investments like fixed deposits. Remember that fixed deposits help your finances grow by giving you returns at a fixed FD interest rate throughout the investment tenor. However, should you find the need to access money immediately, you can withdraw your money before your FD matures. It’s easy, and here’s how you can do it.

Online FD withdrawal procedure

The online withdrawal method can be completed in minutes and may be carried out from the convenience of your PC, laptop or smartphone. All you need is an internet connection. Follow these simple steps.

  • Log on to your issuer’s website.
  • Login to your account by feeding in your user ID and password.
  • Next, go to the ‘service request’ section.
  • Then, click on ‘Premature Closure of FD’.
  • Select the FD you wish to break by entering the correct FD account number.
  • Submit the cancellation request.
  • Your online application will be processed thereafter and once done, you will receive the required funds in your bank account.

Offline FD withdrawal procedure

The offline method involves making a physical FD withdrawal request by submitting a letter to your issuer or branch manager, if you have a bank or post office FD. The offline process is more cumbersome but better suited to areas with poor internet connection. Here’s how you go about it.

  • Write an application to your issuer or branch manager for premature withdrawal of your fixed deposit. The application should state your FD account number and the savings bank account in which you want to retrieve the funds.
  • If required by your issuer, you will also have to fill and attach a premature withdrawal request form with this letter.
  • Submit ID proofs like PAN card along with your application.
  • On successful submission and processing money from your FD will be transferred to your bank account.

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Things to consider before breaking an FD

Even though it is easy to withdraw finances from an FD prematurely it does come at a cost. You incur withdrawal fees, penalties and may even land up with lower earnings, courtesy of a lower FD interest rate than what you signed up for.

Let’s say your issuer offers interest rates of 7% for FDs taken for 1 year and 8% interest rate for a 2-year tenor FD. Now, let’s assume you signed up for a 2-year FD but are breaking it after just 12 months. In this case, your issuer is likely to give you interest returns for a 1-year FD. That is, you could end up with an FD interest rate of 7% and not 8%. On top of this loss come the fees and penalties that at times come in the form of a 0.5% to 1% interest rate deduction. You can count the cost of breaking your FD accurately using the Monthly Interest calculator, thereby subtracting the penalties involved.

Instead of breaking your FD to gain quick liquidity, you can consider using the FD as collateral to get a loan. By accessing a loan against FD, you avoid penalties, get instant finances and your FD continues to accumulate interest through the tenor.  

Breaking an FD is simple but involves certain financial losses. You can minimise these by distributing your finances over several fixed deposits of varying tenors instead of only one. That way, you can ensure continuous liquidity and will never have the need to break your FDs. One FD that allows you to earn high interest returns on your investment is the Bajaj Finance Fixed Deposit. Here, you get interest rates as high as 9.10% and can plan your investments minutely by locking in your finances over flexible tenors spanning from 12 to 60 months.

From providing you the facility of using your FD as collateral to obtain a quick loan to giving you the tools to forecast your earnings and manage your account online, the Bajaj Finance FD allows you to tinker with your financial game plan in minutes. Start investing today by filling up this online application form.

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