A Fixed Deposit (FD) was once a traditional investment option for senior citizens. Lately, the exponential growth in the interest rates has made investors across several age groups to invest their lump sum money in a fixed deposit. Several other investment options in the market do not allow you to withdraw money until maturity. However, an FD acts as a reliable investment tool in 2022 and offers much more benefits, like allowing you to withdraw cash from your FD before maturity.
What is a Fixed Deposit in 2022?
A fixed deposit is an investment option in which you can invest a lump sum as a principal amount for a fixed tenure and earn income from the predetermined interest rates. NBFCs (Non-Banking Financial Companies) offer the highest interest rates with safety, and banks provide reliability and growth. Investors who want fast-paced growth should always choose NBFCs for their fixed deposit investment as NBFCs offer high-interest rates.
Opening an FD is quick and simple; you can do it online or offline by walking into any bank or an NBFC branch. However, before opening an FD, it would be best to calculate your maturity amount and interest rate using an FD calculator.
Moreover, a fixed deposit gives you the flexibility to choose your interest payouts based on your financial requirement. In addition, banks and NBFCs like Shriram also offer an extra interest rate of up to 0.50% for senior citizens.
How to Withdraw Money from a Fixed Deposit?
If you are unaware of the process involved in withdrawing a fixed deposit before maturity, you are in the right place. To withdraw money from an FD, one has to close their fixed deposit account.
There are two types of FD account closures:
- Fixed Deposit Closure on Maturity.
- Fixed Deposit Closure Before Maturity
The above closure types are hassle-free. But, a fixed deposit closure on maturity is free, whereas an FD closure before maturity will cost you a penalty or a lower interest rate from the predetermined interest rate.
Documents Required for an FD Closure Before Maturity
Investors must submit a list of documents if they plan to close an FD before maturity. With Shriram, investors can quickly close their FD by providing any of the following documents from each category.
|IDENTITY PROOF||ADDRESS PROOF|
|PAN Card||Telephone Bill|
|Voter ID Card||Bank Statement with Cheque|
|Driving License||Electricity Bill|
|Aadhaar Card||Passport Size Photo|
|Ration Card||ID Card from Post Office|
|Senior Citizen Card|
Steps to Withdraw Fixed Deposit Before Maturity
It is highly unlikely that any investor will break an FD before maturity unless there is some unfortunate event or an emergency. As a fixed deposit account offers easy liquidity, breaking an FD is one of the best choices in most cases. But, it would be better to give a deep thought before you start the process of withdrawal before maturity.
There are two ways to close/break an FD before maturity – The online and Offline process. Let us now take a detailed look at the process involved in withdrawing a fixed deposit before maturity.
In an offline process, you need to visit the branch and follow the below-mentioned steps:
Step 1: The fixed deposit account holder must keep the following documents and identity proofs ready; the fixed deposit certificate, account holder’s photographs, Aadhaar Card, Passport, etc.
Step 2: Visit the branch where your FD is booked
Step 3: Submit the FD closure application form along with the essential documents necessary for closure.
Step 4: Once the verification is over, banks/NBFCs will transfer your funds to your saving account/bank account linked with your fixed deposit account.
To close a fixed deposit online, you must be registered with the bank’s internet banking facility or have an online account with the respective NBFC. Below are the steps;
Step 1: Fill out the online FD closure application form available on your bank’s or NBFC’s website.
Step 2: Upload your government-approved documents to verify and confirm your identity proof and communication address.
Step 3: If the details match your KYC provided when opening your FD, the bank/NBFC will credit your maturity after deducting the penalty to the linked bank account.
Disadvantages of Withdrawing Money from Fixed Deposit Before Maturity
Although breaking an FD helps customers financially, there are a few disadvantages, like:
Penalty – Banks and NBFCs charge investors a penalty when they withdraw money from their fixed deposits before maturity. The penalty fee is 0.5% to 1% of the total deposit amount, meaning investors get their maturity amount at a rate of 0.5% to 1% less than what investors would otherwise gain.
Loss of Potential Earnings – When investors withdraw before maturity, they do not receive the guaranteed return mentioned when booking the fixed deposit.
All the above disadvantages will adversely affect an investor. However, when you decide, look at the bright side of how the money will help you financially, be it repaying your debts or planning a grand event.
Withdraw Money at Ease
By now, you must be well aware of how to withdraw money from your FD before maturity. So when you plan on breaking a fixed deposit, you should know that fixed deposits from NBFCs like Shriram avail of an option to get a loan against your FD. So make a wise choice according to your convenience today!
- The exponential growth in the interest rates has made many investors worldwide from several age groups invest their lump sum money in a fixed deposit.
- Several other investment options in the market do not allow you to withdraw money until maturity.
- A fixed deposit acts as a reliable investment instrument in 2022.
- It allows you to withdraw cash from your FD before maturity seamlessly.