Charges on premature Withdrawal of Fixed Deposit

In these times of uncertainty, we do not have the patience of investing. When the investors are risk-averse, they do not want their investment to reduce its worth and try to withdraw money as soon as the market show negative trends. These investments could be in equity, bonds, etc. so, when one wants to withdraw his/her investment in fixed income securities like fixed deposits, they would have to pay some charges to avail such facility.

Charges depend on

In case of premature withdrawal of fixed deposits, investors have the option to close their FDs at an earlier date than that of the maturity of the FD. But investors might have to pay some charges. These charges would vary from bank to bank and would depend on several factors like the maturity period, amount of fixed deposit, the interest rate offered. The FDs with the highest interest rate would attract more charges as it would have a longer lock-in period. Early withdrawal of high-interest rate FDs would cause loss to the bank. For example, many banks charge a penalty of up to 0.50% for amounts up to 5 lakhs and 1.00% for an amount ranging from 5 lakhs to 1 crore, across all the maturities.
 

The rate of return would increase with the maturity of fixed deposits. The highest fixed deposit interest like 8.70% provided by PNB housing finance limited would be provided for long term lock-in. So, when investors want to invest in the long term should consider the possibility of any event that may require him/her to withdraw prematurely as it would attract penalty and ultimately affect his/her income.

Read More: Want a safe avenue to invest? Open a fixed deposit online