Fixed deposit (FD) is the most popular investment medium among small investors. This is because investors do not have to bear the risk associated with investment. Also it is decided to get a fixed return.
FDs can be invested for seven days to 10 years. However, despite being a safe option, the biggest problem with FDs is that banks charge a penalty for making withdrawals ahead of schedule. State Bank of India imposes a penalty of 0.5% on premature withdrawal of FDs of Rs 5 lakh. However, there are ways to avoid this which we are telling.
This is how to avoid paying penalty on pre-withdrawal
1. To avoid premature withdrawal of FDs, you can choose a landing approach. Under this option, the depositor can manage interest risk better and get liquidity. Under this option, you can divide your capital into several parts and invest it for different maturity periods. An investor can choose a term of 1 year, 3 years or 5 years as per his convenience. For example, if you want to get an FD of five lakh rupees, you can divide it into five parts and invest for different time periods. You will never face lack of money by doing this. You will be able to withdraw money when needed.
MasterCard’s network will get a chance to shop in cryptocurrency, facility may start this year
2. If there is a concern about liquidity, that is to manage it immediately when needed, you can opt for a sweep-in FD account. In this option, not only the withdrawal facility like savings account is available but also the interest received on FD. In such a situation, no penalty will have to be paid on pre-mature withdrawal from this account. Deposits in this account beyond a limit are automatically transferred to the FD account. Apart from this, if there is not enough balance in the savings account then the balance is transferred from the FD account to the savings account. Under this option, it is necessary to maintain minimum amount in the savings account so that there is no obstruction in the FD.
3. If money is required, it can be taken a loan instead of pre-withdrawal from FD. Most banks provide loans to their investors against FDs. The loan interest on FD is usually 1-2% higher than the interest on this deposit. Experts believe that taking a loan in lieu of FD is better than taking a personal loan as usually both may have to pay more interest for a personal loan. SBI provides loans at a rate of 1 percent above the FD rate. Apart from this, SBI provides loans without any processing fees and pre-payment facilities. There are also some banks that give loans up to 90 per cent of FD deposits.
