With fixed interest rates and guaranteed returns, fixed deposits (FDs) are safe investments. When you invest money in an FD, it is blocked for a predetermined period of time. However, premature withdrawal of fixed deposits is an option, in case of emergency or unexpected expenses
Premature withdrawal of fixed deposits
You can withdraw your FD before the specified duration expires, as the phrase "premature withdrawal" implies. Although you are permitted to withdraw the FD before the deposit term expires, banks charge fees for early withdrawals
What is penalty for premature withdrawal of a fixed deposit
Banks charge a penalty when you withdraw from your bank FD before it matures. According to the terms and limitations provided by the bank, the penalty is normally imposed when you withdraw the FD during the allotted tenure. Penalty fees typically range between 0.5 and 1% of the interest rate.
Here are penalty charges and other rules regarding premature withdrawal from an FD for SBI, HDFC Bank, ICICI Bank, PNB and Yes Bank.
State Bank of India penalty on FD premature withdrawal
According to the SBI website, "For Term Deposit up to Rs 5.00 lacs, the penalty for premature withdrawal will be 0.50% (all tenors). For Term Deposits above Rs 5.00 lacs, the applicable penalty will be 1% (all tenors)."
However, no interest will be paid on deposits that remain for less than 7 days. The interest rate will be 0.50 percent or 1% less than the rate applicable at the time of deposit for the period deposits remained with the bank, or 0.50 percent or 1% less than the contracted rate, whichever is less.
HDFC Bank penalty on FD premature withdrawal
According to HDFC Bank website, "For such premature withdrawals, including sweep-ins and partial withdrawals, the Bank will levy a penalty of 1%, on the applicable rate. However, penalty for premature withdrawal will not be applicable for FDs booked for a tenor of 7-14 days."
The interest rate that applies to premature closure of deposits (including sweep-ins and partial withdrawals) will be the lesser of:
The interest rate during the initial or agreed term for which the deposit was booked OR
The base rate in effect for the time the deposit has been held by the Bank.
PNB penalty on FD premature withdrawal
According to the PNB website, "1% penal interest shall be charged at the time of premature cancellation/part withdrawal of domestic term deposits for all tenors and interest rate payable would be contractual rate minus 1% or the rate under the scheme on the contractual date applicable for the tenor for which the deposit has actually run minus 1%, whichever is lower."
If the deposit is prematurely closed for the purpose of investing in another term deposit plan offered by the bank, no penalty will be assessed as long as the deposit stays with the bank for a duration greater than the balance of the original contract.
Premature withdrawal won't incur any penalties in these circ*mstances
If there is a joint mandate from the joint depositors to this effect, premature withdrawal of term or fixed deposits may be permitted to the surviving depositor in cases of term deposits with "Either or Survivor" or "Former or Survivor" mandates without obtaining the consent of the legal heirs of the deceased joint deposit holder.
ICICI Bank penalty on FD premature withdrawal
In addition to any applicable penalty, interest will be calculated at the rate in effect during the time the deposit was held with the Bank or the contracted rate of the deposit, whichever is lower.
Deposits with a maturity of less than one year and amounts under Rs 5 crore would be subject to a 0.50 percent penalty. For one year and above, there is a 1% penalty.
Yes Bank penalty on FD premature withdrawal
If the duration of the FD (Completed) is less than 181 days, a 0.50 percent penalty will be assessed. If tenure is 182 days or longer, a 0.75 percent penalty will be assessed. It should be noted that Yes Bank does not charge an early penalty to its senior customers.
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