If you also have a FD, then this article is for you. If you are planning to break your FD before maturity, then you should read this news. Right now, most people are investing money in FD. FDs offer different tenures. The post office offers FD options of 1, 2, 3, and 5 years, while the bank offers FDs ranging from 7 days to 10 years. Everyone’s interest rate is also different. But many times people suddenly need money after fixing money in FD, then they break it. Banks charge you a penalty for breaking the FD. In such a situation, you do not get the profit that you could get. What are the ways to avoid this loss?
Penalty has to be paid
If you break the FD prematurely, you do not get the interest on it, which you were told when you started the FD. According to SBI rules, a penalty is charged on interest for breaking the FD before maturity. If you get an FD of up to Rs 5 lakh, then you have to pay a 0.50% penalty if that FD is broken before maturity. At the same time, on FDs of more than 5 lakh and less than one crore, a 1% penalty has to be paid for premature breaking. Also, your interest can also be cut by up to 1%.
How to avoid this pitfall
There are two ways to avoid the pitfalls of breaking an FD prematurely. First, if while getting an FD, you know that after some time you may need money and due to no other option, you may have to break the FD, then it is better that you get a short-term FD. Another way is to not invest all the money in a single FD and make multiple FDs of small amounts.
This means that if you have Rs 5 lakh, then get 5 FDs of 1-1 lakhs. This will mean that if you ever need money and have to break the FD in the middle, then according to the need, you can arrange money by breaking 1-2 FDs. They will continue to get interest on the rest of the FD. Apart from this, if the FD is for a long time, then instead of breaking it, you can also arrange money by taking a loan on it.
