Process to close a fixed deposit account before maturity


Customers are usually allowed to close their fixed deposits before the maturity date. However, if you decide to do this before the full tenure, you may not receive the full interest on your investment and may face a penalty. Essentially, interest will be paid only for the time your deposit was with the bank. When you close the FD, the funds are transferred to your account as usual.

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An FD can either be held until maturity or redeemed or surrendered before the end of its initial term, which is known as premature withdrawal.

Meaning OF FD

Bank fixed deposits (FDs) have long been an attractive financial option, especially among conservative investors looking to safeguard their capital.

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A fixed deposit is a lump sum payment made to your bank for a set period of time at an agreed-upon interest rate. You will receive your initial investment plus compound interest at the end of the term. Fixed deposits are sometimes called term deposits.

Penalties For Premature Withdrawal of FD:

As per experts Information The majority of banks charge a fee for premature withdrawals of fixed deposits. Typically, this fee ranges between 0.5% and 1.00% of the interest rate.

Nonetheless, certain banks do not impose penalties in cases of emergency or when the depositor intends to reinvest the same amount in an alternative investment option offered by the bank.

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Process To Close A Fixed Deposit Account Before Maturity: Online

Step 1: Go to your lender’s website.

Step 2: Log in with your user ID and password.

Step 3: Proceed to the service request section.

Step 4: Select the ‘Premature Closure of Fixed Deposits’ option.

Step 5: Finally, enter the FD number and click Submit.

Benefits of FD

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Easy liquidity-They are safe, and liquidating your deposits is simple. Most FDs, except tax-saving FDs, can be withdrawn prematurely for a small penalty. Furthermore, the procedure is quick and straightforward. You can close your FD online through your bank’s net banking portal.

Tax-saving Option

Fixed deposit investors can deduct up to rs 150,000 from their annual taxable income under Section 80C of the Income Tax Act. This makes it an excellent tax-saving tool while also providing guaranteed returns. However, tax-saving deposits are subject to a mandatory 5-year lock-in period and cannot be withdrawn before that time.

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