Fixed Deposit (FD): It remains a top choice for individuals looking to invest. Their trust in this scheme has been the reason for it for a long period of time. In this plan, investors can rest assured that their money is secure and they can expect guaranteed returns. FDs come with a variety of terms.
How to prevent the loss?
The post office provides fixed deposit options for 1, 2, 3, and 5 years, whereas the bank offers fixed deposits ranging from 7 days to 10 years. Each person’s interest rate varies as well. However, often individuals find themselves in need of cash unexpectedly after investing in fixed deposits, leading them to prematurely withdraw their funds. Banks will impose a fine if you prematurely terminate the FD. In this kind of scenario, you’re not receiving the full profit potential.
How can you prevent this loss? If you withdraw from the FD before maturity, you will not receive the expected interest. As per SBI regulations, a fine is imposed on early withdrawal of FD interest. In case of breaking an FD of up to Rs 5 lakh before maturity, a penalty of 0.50% must be paid. Similarly, a 1% penalty must be paid for early withdrawal on FDs ranging from over 5 lakh to less than one crore. Additionally, your interest rate could be reduced by as much as 1%.
There are two methods to prevent errors
There are two methods to prevent the errors of ending an FD too soon. If you anticipate needing to access funds before the maturity of your FD and you may have to withdraw early, it is advisable to opt for a short-term FD. An alternative option is to divide the money into several smaller FDs instead of putting it all into one FD.