Fixed Deposit: On breaking the FD, your money is given by charging a penalty according to the amount of your original FD.
Fixed Deposit: Many times it is seen that people break their Fixed Deposit (FD) when they suddenly need money. But by doing this you may have to bear the loss. Because if you break FD before maturity (prematurely) then you will get less interest and also you will have to pay penalty. Know about the disadvantages of breaking FD before maturity and loan facility available on FD.
Suppose you have made an FD of Rs 1 lakh at the rate of 6% for one year, but you break it only after 6 months, then the bank will give you interest at the rate of 5% and not at the rate of 6%. According to the rules of the country’s largest bank SBI, if a person gets an FD up to Rs 5 lakh and breaks it before maturity, then he will have to pay a penalty of 0.50 percent. Similarly, 1 percent penalty will have to be paid on premature break on FDs of more than 5 lakhs and less than one crore.
Suppose you get an FD of Rs 1 lakh and you are getting an interest rate of 6 per cent. But if you break it before the completion of the time, then you will get interest at the rate of 5% (different bank different rate) and not 6%. Means you will get five thousand interest of one lakh but a penalty of 0.5% will be deducted from your principal amount. In total you will get Rs 1,04,500. On breaking the FD, your money is given by charging a penalty according to the amount of your original FD.
But if you had not broken it ahead of time, you would have got one lakh six thousand rupees. That is, these figures show that there can be a total loss of Rs 1500 if the FD is prematurely broken.
At the same time, you can also take a loan up to 90 percent of the value of FD. Suppose the value of your FD is one lakh rupees, then you can get a loan of 90 thousand rupees. If you take a loan on FD, then you will have to pay 1-2% more interest loan than the interest you get on fixed deposit. If you are getting 4% interest on your FD, you can get loan at 5% to 6% interest rate.