fixed deposit: How much is charged for breaking FD prematurely, know the rules of the bank
fixed deposit: Nowadays most of the people like to invest in FD, in this the money is safe and with more time one gets more interest. But many people are not aware about FD and hence they break the FD before time, but let us tell you how much is the charge for breaking FD before time. Let us know the rules of the bank...
HR Mandi Bhav News, digital Desk- New Delhi: People have had faith in fixed deposits for years because after a certain period of time you get guaranteed returns in it.
But many times, when necessary, people get the FD broken before time. Banks give you the option of premature withdrawal.
You can withdraw your money before the fixed period of FD. But for this you have to pay penalty. If you break your FD before maturity, you get less interest and you will also have to pay a penalty.
When you invest in fixed deposits, your investment is locked for a period. You choose your investment according to the period and return.
Your money gets locked for this period, which is received along with interest returns after maturity. But then in case of emergency, you can break this FD even before maturity.
How much is the charge?
Banks charge penalty for withdrawing money from FD before time. These rates are different in different banks.
This penalty is deducted from your interest rate only. In some cases it may be up to one percent. Banks usually charge you a penalty of 0.5% to 1% of the interest rate. That means the penalty is taken from your interest money.
How much is the penalty in SBI
According to SBI rules, if your FD is broken before maturity, your interest is reduced by up to 1%. Apart from this, penalty is also collected on the interest received on it. If you get an FD up to Rs 5 lakh.
So if that FD is broken before maturity, a penalty of 0.50% has to be paid. Whereas for making FD of more than Rs 5 lakh and less than Rs 1 crore, 1% penalty has to be paid for premature break.
How is interest calculated on FD?
If you break the FD prematurely, the effective interest rate will not be the same at which it was opened. In banking language it is called booked rate. This is the rate at which an FD account is opened. Instead, interest will be paid at the card rate according to the length of time the money has remained in the bank.