Do you want to urgently withdraw your Fixed Deposit before its maturity? Read on to know four major reasons why it’s a bad idea.
There are many ways people invest their money to keep them growing so that they can get a good amount as the return on investment or ROI and meet future goals.
Although there are many investment options in India that people use such as bonds, equities, mutual funds, stocks, real estate and more, Fixed Deposit is considered safe.
A Fixed Deposit is a term-based investment plan which is considered a reliable investment option compared to other plans. It is because compared to other options, Fixed Deposits offer a sure-shot return on investment at the end of its tenor.
Since Fixed Deposit’s ROI is not impacted by the fluctuations of the market, investors get the guaranteed amount and the purpose of their investment is met easily.
However, if you invest in a Fixed Deposit scheme and wish to withdraw the amount before the end of the tenor or its maturity, it is not considered a good idea by experts.
If you are considering to withdraw the money out of your Fixed Deposit account, you need to pay premature Fixed Deposit withdrawal penalty and you won’t get the interest income on it.
You can utilize the FD premature withdrawal penalty calculator to know how much you will lose. The FD premature withdrawal penalty calculator is an online tool which you can use at a leading FD service provider.
Here are some reasons to help you know that premature withdrawal of term deposit such as the FD is a bad idea:
- Be Ready to Cough Up Some Charges
If someone has an urgent need for money and for that, he would need to break his/her Fixed Deposit before the end of the plan, some penalties will be charged. Yes, the FD account holder needs to pay some premature Fixed Deposit withdrawal penalty to lenders for doing that.
- You Will Have to Lose Your Interest Income
No matter for whatever reasons one decides to break his/her Fixed Deposit account, the whole purpose of the investment goes kaput. It happens because of withdrawing the Fixed Deposit before its maturity date, one also loses the interest income gained. As a result, the lender only credits the original invested amount and nothing else.
- Growth Chances Don’t Go Up
As the Fixed Deposit account which is invested for a long tenor gives more value to the investor, withdrawing it before the maturity date does harm to the chances of growth. The higher the tenor for FD that one has, the higher the chances of receiving huge growth at the end of the tenor. Once you let it grow and receive the amount only at the maturity, you can use it for future purposes such as going on a holiday and more.
- You Let the Financial Uncertainty to Loom Large
Suppose if you are retired and had invested the money in the FD for gaining a higher amount and withdrawing before its maturity, you are allowing a phase of uncertainty. As you will lose out on your expected source of income, withdrawing the FD before its maturity will do no good in the long-run. If you want money urgently, it is better to avail a loan against the FD at lower interest rates and let your FD keep earning the interest income.
You just saw how premature withdrawal of your Fixed Deposit may not be a good idea. You must compare different FD interest rates from Banks and NBFCs to choose best FD rate. Try to opt for a loan against FD if you urgently need money and let the FD grow.