A Fixed Deposit (FD) is a long-term investment where you deposit a sum of money for a fixed period of time, usually ranging from 1 year to 5 years. The interest rate on FDs is usually higher than that of savings accounts, and this makes them a popular choice for those looking to grow their money.
However, there may come a time when you need to access the money in your FD before the end of the term. In such cases, you can either renew or withdraw your FD. Here’s a quick guide on how to do both.
What is a Fixed Deposit?
A fixed deposit is a savings account where you can deposit a lump sum of money for a set period of time. The money is locked away and cannot be accessed until the end of the term. This makes fixed deposits a safe and secure way to save money.
Fixed deposits typically offer a higher interest rate than a regular savings account, making them a great way to grow your money. You can choose the term of your fixed deposit, from 1 month to 5 years. At the end of the term, your money will be returned to you with interest.
If you need access to your money before the end of the term, you can usually withdraw your deposit early. However, you may forfeit some or all of the interest that you would have earned if you had left the money in until the end of the term.
Renewing or withdrawing your fixed deposit is easy, but it’s important to know the rules before you get started. This article will tell you everything you need to know about renewing or withdrawing your fixed deposit.
The Process of Renewing a Fixed Deposit
When it comes time to renew your fixed deposit, you have a few options. You can either renew your deposit with the same bank or financial institution where you originally made the deposit, or you can withdraw the money and reinvest it elsewhere. If you choose to renew your deposit, the process is generally pretty straightforward. The bank will simply roll over your investment for another term, and you will continue to earn interest at the agreed-upon rate.
If you decide to withdraw your money and reinvest it elsewhere, you will need to follow a few steps. First, you will need to give the bank or financial institution notice that you intend to withdraw your money. This is typically done by sending a written notice, although some institutions may require that you give verbal notice as well. Once the bank has received your notice, they will calculate the FD interest that has accrued on your investment and pay this amount to you. You will then be able to withdraw your principal investment.
Before making any decisions about renewing or withdrawing your fixed deposit, be sure to speak with a financial advisor to get more information about what option would be best for you.
Steps to Renew a Fixed Deposit on Maturity
It is important to make a decision about renewing your fixed deposit before it matures. You can either withdraw the money or renew the fixed deposit for another term. Here are the steps to renew a fixed deposit:
- Talk to your bank representative: Before making a decision, it is always best to speak to someone at your bank who can give you more information about renewing your fixed deposit. They will be able to answer any questions you have and help you make the best decision for your needs.
- Decide if you want to withdraw or renew: Once you have all the information you need, you can decide if you want to withdraw your money or renew your fixed deposit for another term. If you decide to withdraw, you will receive the principal plus any interest that has accrued. If you decide to renew, your money will remain in the account and continue to earn interest.
- Choose the new term length: If you decide to renew your fixed deposit, you will need to choose a new term length. This can be anywhere from one month to five years, depending on what your bank offers.
- Sign the new contract: Once you have decided on the new term length,
Steps to Withdraw a Fixed Deposit on Maturity
If you have a fixed deposit that is about to mature, you may be wondering how to go about withdrawing the money. Here are a few simple steps to follow to ensure that you get your hands on your cash as quickly and easily as possible.
- Firstly, you will need to contact your bank or financial institution and let them know that you wish to withdraw your fixed deposit.
- They will then give you a withdrawal form which you will need to fill out and return to them.
- Once they have processed your request, they will give you a cheque for the amount of money that is in your fixed deposit account.
- You can then take this cheque to your local bank branch and cash it in, or deposit it into your own personal account if you wish.
- And that’s it! Withdrawing your fixed deposit on maturity is a simple process that shouldn’t take more than a few days to complete.
What happens when you Close an FD Prematurely?
When you close an FD prematurely, you may lose out on some interest. The amount of interest you forfeit depends on the amount of time left on your FD. For example, if you have a 1-year FD and you close it after 6 months, you will only earn interest for the 6 months that it was active.
Additionally, some banks may charge a premature withdrawal fee. This fee is typically a percentage of the interest earned or a flat rate, whichever is higher. For example, a bank may charge a premature withdrawal fee of 1% of the interest earned or a flat rate of $25, whichever is higher.
Before closing an FD prematurely, make sure to check with your bank to see if there are any penalties involved.
Online FD Closure:
It is now possible to close your FD account online without having to visit the bank branch. All you need to do is login to your internet banking account and go to the Fixed Deposit section. From there, you can select the FD account that you want to close and follow the instructions. Usually, you will be required to enter the amount that you want to withdraw and the date on which you want to close the account. After that, you will see a confirmation message and your FD account will be closed.
Offline FD Closure:
If you have an FD that you opened offline at a bank branch, you will need to visit the branch in person to close the account. This can be done by filling out a withdrawal form and submitting it to a bank representative. The representative will then process the withdrawal and return the remaining balance to you.
If you need to withdraw your FD before the maturity date, you may be subject to penalties. Early withdrawal penalties vary depending on the bank, but they typically range from 1-3% of the total FD amount. For example, if you have a $10,000 FD and the early withdrawal fee is 2%, you would owe the bank $200.
Before closing your account, make sure to check with your bank to see what their specific policies are. Some banks may require that you give them notice ahead of time, while others may not have any restrictions.