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What is the penalty for premature withdrawal of fixed deposit?

What is the penalty for premature withdrawal of fixed deposit?

Investing in fixed deposits for a specific tenor helps you earn at steady interest rates. However, unforeseen circumstances may warrant urgent financing, and you may want to liquidate your savings before the tenor ends.

Can we withdraw money from fixed deposit before maturity?

The rules for withdrawing prematurely from a company FD, depend on when you choose to withdraw from your deposit.

In case no rate has been specified for that period, the interest rate payable is 3% lower than the minimum interest rate at which public deposits are accepted by the non-banking financial company.

Withdrawal Time (after deposit) Is withdrawal possible? Principal amount received Interest amount received
Within 3 months FD cannot be liquidated before lock-in period of 3 months, except in the event of death - -
Within 3-6 months Yes Yes No
After 6 months Yes Yes Interest payable is 2% lower than the interest rate applicable to a public deposit for the period for which the public deposit has run

In case no rate has been specified for that period, the interest rate payable is 3% lower than the minimum interest rate at which public deposits are accepted by the non-banking financial company.

Disadvantages of breaking your FD prematurely

Often, breaking your FDs prematurely can adversely impact your investments.

Disadvantages of breaking your FD prematurely

  • Loss of interest: You may have to forego the interest accumulated or earn at a lower rate.
  • Penalty: In addition to loss of interest, your financial institution may charge an additional penalty.
  • Financial uncertainty: You may lose out on a source of emergency funding.

Instead of withdrawing prematurely, consider a loan against fixed deposit to obtain cash flow without liquidating your savings.

When you invest in a Bajaj Finance Fixed Deposit, there is a lock-in period of 3 months. While there is no penalty on withdrawing money prematurely, you may incur losses in terms of earned interest. You can also opt for a loan against your FD after the initial lock-in period of 3 months. Login to our customer portal – Experia to know more details and apply.

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