Closing a Fixed Deposit (FD) is a simple process and can be done online at the convenience of your home. There might be numerous reasons for closing an FD. However, it most cases, it is usually a financial emergency. There are two methods of closing an FD:
Before you visit the bank branch to close the FD, write a letter to the branch manager mentioning that you want to withdraw the FD prematurely. In the letter, mention the deposit number and other details. Below is a sample of such a letter.
The Branch Manager
Subject: Request for Closure of FD Account
I am writing this letter with regard to my FD account, which I would like to close due to a personal financial emergency. I appeal to you to please ensure that the FD is closed as soon as possible. Also, please credit the proceeds from the term deposit account to my savings account.
Please find below, the details of my term deposit:
Deposit account number: XXX
Opening date: XXX
Type of deposit: XXX
Name of deposit holder: XXX
Request you to kindly process the request at the earliest possible date.
It is important to close an FD on the maturity date because once an FD matures, the term deposit may get automatically renewed, if the depositor has given auto renewal instructions. However, even if there is no maturity instruction, in most cases the FD is put for auto renewal. In some cases, the depositor would have given the bank his/her savings account details for the crediting of term deposit funds after maturity.
This will have implications on the maturity amount and interest calculation and hence it is wise to claim for deposit at maturity. If there is no claim on an FD for more than 2 or 3 consecutive maturity dates, which may be likely if the customer forgets to renew the FD account, the bank will try to contact the customer or nominee to hand over the money.
In case you have forgotten to make a claim on your FD and it has matured several years ago, follow this process to make a claim:
Most of us break our FDs prematurely, in an unplanned manner, to meet are sudden financial goals. This will cost you dearly and you will not be able to get the maximum returns out of the term deposit. Though the penalty amount may look small, when it is calculated, it does cause a certain sizable loss.
|Rate of interest for premature withdrawal = interest rate on actual deposit period -1%|
Yes. Banks usually levy a certain penalty amount for withdrawing the FD account prematurely. The penalty amount may differ from bank to bank and the type of deposit held.
Generally, if the FD was not opened online, it may not reflect in your net banking account. Although, with some banks the FD can be closed online even if it was not opened online. However, you can request your customer care to help you with the online closure.
Penalty will be a certain percentage of the interest amount earned. This percentage charged will vary from bank to bank.
Yes. If your bank does not charge you, then this is likely. Also, note that if you have held the deposit for 7 days, most banks will not charge a penalty.
No, this will not be possible.
No. Any type of tax-saver FD cannot be withdrawn prematurely.
Ideally, loan/overdraft facility is not granted for tax-saver FDs.
Yes. NRIs who return back and loose their NRI status can ideally close their FDs and make other investments.
Ideally, this percentage will range around 0.4% to 1.2 %. The percentage depends on where you hold the FD, if it is a private or a public sector bank, along with other factors.
Yes. This is a must.
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