• Renewals and Withdrawals of Fixed Deposits

    Fixed Deposits (FD), are a popular investment choice among Indians and is always subject to renewal and withdrawal. This applies to  all types of term deposits including those in banks and those in Non-Banking Financial Companies (NBFC). Let’s say you open an FD account for Rs.3 lakh for 10 years at the rate of 10%. After the completion of 10 years, the term deposit will have to be renewed if you want to continue to hold to it. Otherwise, it has to be withdrawn. In case you forget to renew it, it will be auto renewed for the same tenure if you have given maturity instructions. Renewal happens at the present interest rate that is offered on the term deposit.

    It is very important to keep track of your term deposits, because if you completely forget to renew it, the maturity amount will be difficult to claim later or it may be paid to the nominee. Auto-renewal may prove disadvantageous if the bank has reduced its interest rates. On the other hand, premature withdrawal may be subject to penalty charges.

    Some important terms on renewal and withdrawal of FDs
    Withdrawal A term deposit holder can withdraw the principal invested along with the interest earned when the FD reaches maturity
    Renewal An FD holder can renew a deposit when it reaches maturity for the same tenure  if she/she wants to do so.
    Auto-withdrawal Auto-withdrawal happens when the bank or NBFC automatically credits the maturity amount (principal + interest) to the customer’s savings bank account upon completion of the deposit tenure.
    Auto-renewal If an FD holder has given instructions to the bank, the deposit will be automatically renewed for the same duration at the current rate of interest.
    Premature withdrawal When a deposit is broken before the maturity period it is referred to as premature withdrawal. Some banks may charge a penalty for this.

    Renewal of FDs

    • On maturity, an FD can be directed toward renewal or withdrawal.
    • The renewal clause is available as an auto-renewal feature, wherein the bank or financial institution will automatically renew your deposit for the same period of time and at the same interest rate on maturity.
    • This is a good option if you have invested funds without any foreseen need for them.

    Withdrawal of FDs

    • The auto-termination option shuts down the FD on maturity and transfers the funds to a preselected savings account.
    • Once again, the auto-termination option might result in lower interest rates on your reinvestment owing to market changes during the tenure of the original FD.
    • It is important to take an informed decision while renewing your FD so as to get the highest benefits.
    • Withdrawal can be done even before the FD matures, however, this may attract some penalty charges

    How to close an FD prematurely online: Step-by-step process

    Step 1: Log on to your bank website using all login credentials. Please note that you need to have an active internet banking account to close an FD online

    Step 2: Once logged in, go to the home page and click on ‘Close FD account prematurely’

    Step 3: A list of all the FDs that you have will be displayed, click on the one you wish to close

    Step 4: Verify details and provide password credentials to authenticate the transaction. The funds will be credited to the account that is linked to the term deposit

    What happens when you forget to renew an FD?

    ‘Buy and Forget’ mentality, you might sometimes lose out on better deals which you could have found even on a cursory look at available options.

    Let’s say you invested Rs.5 lacs in a 5 year FD with interest rate of 0%. At the end of 5 years, the fixed deposit rates have fallen to 8%, a significant decrease over the said period. In case you had opted for auto-renewal, you would have been automatically enrolled in the same FD for another 5 years and at the same rate of 10% regardless of market rates. If you had opted for withdrawal, a new FD will offer you 8% rate of interest on the deposit.

    Suppose you have bought an FD of Rs.5 lacs for a tenure of 5 years and forgot about the maturity date. At the 6th year when you do realize that you had invested in an FD, you go back to the bank and ask for withdrawal of funds. The bank obliges, but you end up losing interest for the excess 1 year of deposit because it will be considered preclosure of the account. If you had opted for auto-withdrawal, you would have received the amount in a bank account and taken decisions to grow it or let it idly earn savings interest.

    FAQs on FD withdrawal and renewal

    1. What is maturity instruction?

    When you are purchasing an FD, all banks and NBFCs ask for what is known as a maturity instruction. Instructions can be given for auto-renewal of the term deposit.

    2. Can an FD be renewed online?

    Yes. If the deposit account has been opened online, it can also be renewed online through net banking or mobile banking.

    3. Do all banks charge a fee/fine/penalty for premature withdrawal?

    This varies from bank to bank. While some banks or NCFCs may levy a certain fee, others may not.

    4. Can I withdraw a tax saver deposit before the completion of the said tenure?

    No. All Tax saver FDs come with a lock-in period of 5 years, before which no withdrawal can be made at any cost.

    5. How to ‘break’ an FD?

    In case of any kind of financial emergency, you can close the term deposit before the agreed duration and get the funds credited to your bank account.

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    Customer Reviews

    • ICICI Bank Fixed Deposit
      "Customer centrice & User friendly app"
      0.5 4.0/5 "Great!"
      I am doing Fixed Deposit with ICICI BANK and its been around 5years. They haven't been paying good interest and its more or less same like other banks as I used to hold my salary account with ICICI, I have decided to be with one bank. There is no locking period and its flexible. They do give good support and the app is user friendly. Even deposit account can be opened through i-mobile or net banking itself.
      Was this review helpful? 0
      , nasik
      Reviewed on Oct 15, 2019
    • SBI
      SBI Fixed Deposit
      "Good"
      0.5 3.0/5 "Satisfactory"
      I had a Fixed Deposit in State Bank of India, I have completed the tenure before 3months ago. I have no issues with the customer service. They are given me 7% interest rate for 2years. There is no profit and processing fee. I got an online access, where I can check the interest rate anytime on the YONO app or else SBI online.
      Was this review helpful? 1
      , tirupati
      Reviewed on Oct 15, 2019
    • SBI Fixed Deposit
      "Interest charges are good. "
      0.5 3.0/5 "Satisfactory"
      I have invested some money through FD. My salary account is in SBI so i have a zero ATM charges and the limit is not actually set by SBI. They do have short term FDs which is pretty good. I have invested the money of Rs. 60000 and the interest rate is 10.01% for the tenure period of 16 months. There is no lockin period. There is no hassle to getting the money back.
      Was this review helpful? 7
      , kolkata
      Reviewed on Oct 01, 2019
    • Dena Bank Fixed Deposit
      "Good plan for senior citizen"
      0.5 2.0/5 "Expected more"
      I have invested the money in Dena bank through Fixed deposit and the growth is not that much good. They are not taking any hidden charges. Only because of the Government undertaken bank, i have selected them. They are providing a interest rate of 6% per annum. I have invested the money of Rs. 2 lakhs. There is a lockin period of 1 year.
      Was this review helpful? 3
      , new delhi
      Reviewed on Sep 24, 2019
    • Axis Bank Fixed Deposit
      "Interest should be increased for FD"
      0.5 3.0/5 "Satisfactory"
      I have opt for fixed deposit for the tax saving purpose because I have chosen five years tenure with AXIS Bank, still its going on. Only once I Invested my money it has the locking period of five years. I have option to check my transactions through mobile app. But I have concern about the interest rate is very lesser for this FD.
      Was this review helpful? 5
      , hyderabad
      Reviewed on Sep 19, 2019
    • SBI Fixed Deposit
      "FD process should be simpler"
      0.5 1.0/5 "Really Bad"
      I had fixed deposit with SBI then I withdrawn the amount, I done Rs. 3 lakhs of investment on my daughter name then I taken the liquidity to purchase the land, at the time I struggled a lot to take that money because the process was difficult to withdrawn the money after seven months of tenure.
      Was this review helpful? 15
      , madurai
      Reviewed on Sep 03, 2019
    • Union Bank of India Fixed Deposit
      "Not good"
      0.5 3.0/5 "Satisfactory"
      I had a Fixed Deposit with Union Bank of India and its closed 18 to 19 months due to personal reasons. I am doing investment but my experience is not good with FD account. In my home town, there is no other banks so just decided to go with this bank. The returns are good.
      Was this review helpful? 7
      , bangalore
      Reviewed on Aug 28, 2019
    • HDFC Bank Fixed Deposit
      "Good to go with HDFC"
      0.5 5.0/5 "Blown Away!"
      I have one FD with HDFC, I deposited Rs. 1 lakh, I was opt for 45 days of tenure. Finally I got 6.25% of interest for 45 days. It won't cover the tax, if we need tax benefits we should go for five years term. I can track the details through netbanking, on the maturity date the amount credits automatically in the account. Even the notification can customized.
      Was this review helpful? 8
      , bangalore
      Reviewed on Aug 27, 2019
    • HSBC Bank Fixed Deposit
      "wrong calculation of interest rates"
      0.5 0.5/5 "Unacceptable"
      HSBC staff wrongly pre closed my fixed deposit .. and calculated the interest rates wrongly and when asked them for clarification never got back .. even after following up with them repeatedly for more than 3 months.. would highly recommend not using their services.
      Was this review helpful? 4
      , visakhapatnam
      Reviewed on Aug 24, 2019
    • SBI Fixed Deposit
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I do have a Fixed deposit account with SBI and it was carried out by Mom and even I have account for my daughter. Its still running and they have Google application separately to access online. The returns are good. I am doing monthly investment and it was opened quite a long may be 4 years.
      Was this review helpful? 9
      , ahmedabad
      Reviewed on Aug 23, 2019
    • ICICI Bank Fixed Deposit
      "Good"
      0.5 5.0/5 "Blown Away!"
      I just opened a Fixed Deposit with ICICI BANK and have not done any survey on this. I am account holder with them so it was easy to do FD account even they are providing 7% interest rate. The process is very user friendly and never faced any hassle. I could access this account via online.
      Was this review helpful? 6
      , new delhi
      Reviewed on Aug 21, 2019
    • Post Office Fixed Deposit
      "Good for future"
      0.5 3.0/5 "Satisfactory"
      In post office rate of interest is higher for the fixed deposit when compared to the bank, I invested Rs. 5000 on monthly basis its comes in a year Rs. 60,000 after 5 years I got Rs. 3.75,000 I got Rs. 75,000 extra. The service is not comfortable if we have any relative who working there it would supportive or else difficult.
      Was this review helpful? 17
      , burdwan
      Reviewed on Aug 09, 2019
    • SBI Fixed Deposit
      "Good for future saving"
      0.5 5.0/5 "Blown Away!"
      I have FD with SBI, I have opt for one year term there is no such limitation for depositing the money. The interest rate is good for the FD, the online banking is convenient to take liquidity. They resolve the queries on time. Its most safe and secured.
      Was this review helpful? 4
      , visakhapatnam
      Reviewed on Aug 08, 2019
    • SBI Fixed Deposit
      "Average"
      0.5 4.0/5 "Great!"
      I have selected state bnak of indis fixed deposit amount 1 lakhs , Tenure 5 years and Rate of interest 8 percentage after renewal fixed deposit 6 percentage is very less .while document directly bank . Customer service is not good and responsive.
      Was this review helpful? 8
      , kochi
      Reviewed on Aug 05, 2019
    • Kotak Fixed Deposit
      "Excellent Banking"
      0.5 5.0/5 "Blown Away!"
      I activated FD account with Kotak, I have been maintaining this account since when I opened saving account, I converted Rs. 5000 for one year. They are providing interest around 7.6% per annum, the online netbanking and mobile app is very convenient for deposit to FD.
      Was this review helpful? 5
      , mumbai
      Reviewed on Aug 03, 2019
    • ICICI Bank Fixed Deposit
      "Good"
      0.5 4.0/5 "Great!"
      I have invested my FD with ICICI BANK and also have a 3in1 account with them. The interest rate is pretty good. Recently started before 6months, I can do premature withdrawal and also have selected a locking period of 3 years. The customer service is good and overall am satisfied with this bank.
      Was this review helpful? 4
      , mumbai
      Reviewed on Aug 01, 2019
    • Post Office Fixed Deposit
      "Safe and Secured"
      0.5 4.0/5 "Great!"
      My Post office branch is located in own campus hence there is no queue. I opened the fixed deposit, I made one time investment for five years its has tax exemption. They are providing 7% of interest for per annum. I believe it has online access as well.
      Was this review helpful? 13
      , bangalore
      Reviewed on Aug 01, 2019
    • SBI Fixed Deposit
      "Too much good scheme"
      0.5 5.0/5 "Blown Away!"
      Chosen my fixed deposit from State bank of India. I have invested the money of Rs. 57000 and SBI is a most popular bank all over the India and offering all the facilities compared to bank. Since i have a salary account with them, its easy to transfer the money. They are providing the interest rate of 6.5%.
      Was this review helpful? 7
      , kolkata
      Reviewed on Jul 31, 2019
    • Union Bank of India Fixed Deposit
      "Good Investment"
      0.5 4.0/5 "Great!"
      Union of India fixed deposit is same as other investment. Being an existing customer I have opt for one year of fd, the online banking feature is good to open and closing the account, they was no charges for the liquidity of fund before the maturity.
      Was this review helpful? 3
      , mumbai
      Reviewed on Jul 29, 2019
    • SBI Fixed Deposit
      "Good investment plan"
      0.5 4.0/5 "Great!"
      Chosen my fixed deposit from state bank of India because the given rate of interest is high. They are not deducting any service charges. I have invested the money of Rs. 1 lakhs and there is no lockin period and i have chosen the plan for 1 year and they are giving a interest rate of 6.75%.
      Was this review helpful? 11
      , bangalore
      Reviewed on Jul 25, 2019
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