Finance is an important aspect of our life. You need money to lead a comfortable life. You need money to check them off your bucket list and to secure the future of your loved ones. Your profession is undoubtedly the primary means of earning money. However, it is not the only one. Investments are a way to secure and keep your money working.
Over the years, Fixed Deposit has been a default investment option for several investors in India. You park a lumpsum amount for a specific tenure. You keep earning reasonable interest throughout the tenure. You can receive the interest earnings regularly or club them to your principal sum to maximise investment returns. You can invest in FDs with any leading bank or non-banking financial company.
As FD rates vary, you should consider the interest rates offered when choosing an institution for investment. The higher the interest rate, the better.
Is it possible to prematurely withdraw FDs?
You can invest in an FD for a specific tenure. Typically speaking, you should stay invested for a specific term. However, if you need to access your investment money for any reason, you can prematurely withdraw your FD. You can request an immediate premature withdrawal by visiting the nearest bank or online.
What happens to your interest earnings in case of a premature withdrawal?
As mentioned, you earn reasonable interest on your deposits through the investment tenure. Your interest earnings depend on the tenure you opt for. A longer tenure translates to higher interest earnings and vice-versa. Hence, you should always consider investing in FDs for a longer tenure. If you make a premature withdrawal, you earn interest only for the tenure you remain invested in.
This means you should prepare to lose out on significant interest earnings. The interest rate applicable for calculation varies. For instance, a basic interest rate is considered if you remain invested only for the minimum period, say seven days. You can download your bank's Banking app to learn about their premature withdrawal rules and interest calculations. You can always approach the bank's customer care representative for guidance if you are still unclear.
What is a viable option other than premature withdrawal?
Suppose you have a medical emergency to finance. You have an Insurance Plan, and the emergency costs will be reimbursed in a few months. You would consider premature withdrawal. However, you should refrain from doing that. Early withdrawal means you lose interest earnings and disturb your long-term financial goal.
Pledging your Fixed Deposit to avail yourself of a Loan is a viable option. You can get the funds necessary to finance the medical emergency. You can repay the Loan amount whenever you receive the Insurance reimbursement and do not lose out on interest.
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