Thursday, December 1, 2016, AM | Leave Comment
Are you in need of cash urgently? Looking to break your fixed deposit? That might be counterproductive. Find out how that might not be the best thing to do.
You’ve taken out a fixed deposit and started saving. But a sudden emergency arises where you have to think about breaking your fixed deposit. Although this might seem harmless initially, it’s actually a bad idea when you think about it.
Although you will get your money back when you break your fixed deposit prematurely, there are some other factors that you should consider, before you actually go ahead with it.
The New Interest Rate doesn’t Mean You’re Going to Profit
Banks usually refresh their interest rates on their FD on regular occasion. If the interest rates that come out after the refresh is greater than what you’re getting currently, it’s not a reason to break your fixed deposit. A lot of banks experience that, and they don’t like it.
When you try to do that, they’ll try and convince you otherwise, usually through a penalty. If you want to avoid paying that penalty, then you’d be wise to keep your fixed deposit secure.
Not only this, you might also be subject to a penal interest, where they will deduct a portion of the new interest for your premature breakage. If that happens, you could find yourself with a lower interest rate on your new fixed deposit than you had on the old one. Add the penalty on top of this, and you have an investment that actually costs you money, instead of making money.
You’ll be Incurring a Penalty
Since you’re not letting the money stay with the bank for the full period, in most cases, you’ll have to pay a penalty to get your money back. While this may seem normal and nominal at times, they can be somewhat detrimental, since the hard earned interest that you saved up usually is lost through this.
This is something that you want to avoid. So avoid breaking the fixed deposit as prematurely as possible. Premature fixed deposit breakage can make you lose more than you actually stand to gain.
How to Break Fixed Deposit Prematurely
If you really feel the need to break your fixed deposit prematurely, here is how you go about it.
Fill out the Premature FD breaking form with the details of the account that you want the money delivered to. If your bank doesn’t have this, then you can write a letter to the bank stating that you want to break your FD early, with the details of the account to credit to.
Provide original ID to the bank so they can verify that it is your account that they are breaking.
After this, your fixed deposit will be broken and the money will usually be transferred instantly, after the bank employees inform you of any penalties and charges that you may occur.
Please remember that you should only do this as a last case scenario. This is definitely not something to do unless you have no other choice, since the penalties that you usually incur will mean that you are actually losing money that you otherwise could have gained.
If you’re looking to make an investment with good FD interest rate, fixed deposit maturity, and a good return.
They have some great offers on fixed deposits and a number of other investment options. Being an NBFC, they also offer a higher interest rate than banks usually do.
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