There will be times you’ll have an urgent requirement for funds and you’re tempted to break your Fixed Deposit account in advance. This isn’t a good idea. We tell you why.
You have a good sum in your Fixed Deposit account and there’s a financial emergency. What do you do? No! You don’t break your Fixed Deposit account. There are other ways to arrange finances rather than premature withdrawal.
Disadvantages of Breaking your Fixed Deposit Account Before Time
The drawbacks of choosing to break your Fixed Deposit account before its maturity are listed below.
- This decision affects your rate of interest on FD. Maintaining a Fixed Deposit account is a source of regular income.
- You’ll have to deal with a penalty on premature withdrawal. Here’s how banks calculate the penalty—interest rate applicable for actual period of Fixed Deposit as per the rates prevalent at the time of investment – 1%. You can also use an FD maturity calculator to find out how much money you’re losing out on.
Alternative to Premature Withdrawal of your Fixed Deposit Account
Instead of breaking your Fixed Deposit, take a loan against your Fixed Deposit account. The advantages of taking a loan are:
- Your Fixed Deposit account continues to earn interest
- Many banks offer you up to 90-95% on your Fixed Deposit account as loan amount. The loan you acquire depends on the Fixed Deposit amount and varies from bank to bank
- In most cases, you won’t be charged an additional fee if you take a loan against your Fixed Deposit account
- You get sufficient time to repay your loan but it cannot exceed your Fixed Deposit tenure. You also get to choose a suitable repayment structure
- The loan can even be settled at the time of the Fixed Deposit maturity. If you’re unable to clear the loan amount in time, the amount will be adjusted against the Fixed Deposit funds
- While applying for a loan against a Fixed Deposit account you won’t have to go through the hassles of documentation and application. All you have to do is approach your bank and they will sanction the amount
Breaking a Fixed Deposit account involves penalty and in turn loss of a decent sum of money. 1% may seem like a small bargain but adds up to quite a number in the long run. It’s a feasible option to take a loan against your Fixed Deposit account.
How to Apply for a Loan Against Fixed Deposit?
Once you’ve decided to take a loan against your Fixed Deposit account all you have to do is fill a form and submit your Fixed Deposit receipts with the bank. After this your bank will approve the loan and the amount will be credited to your account.
Points to Remember:
- You will granted a loan against your Fixed Deposit account only if it’s free from lien, restraint or encumbrance.
- The account can not be in the name of a minor.
- In the case of a joint Fixed Deposit account, all the account holders must sign the loan documents. The liability to repay the loan will be will be on each one’s shoulder.
- You’ll continue to receive the interest on your Fixed Deposit account.
- Repayment structure of the loan amount can be in the form of EMIs
This is why taking a loan against your Fixed Deposit account makes a whole lot of sense that going for a personal loan to meet your immediate financial needs. It’s convenient, easily accessible, and if you’re incapable of repaying the loan amount your assets won’t be in danger.
Can You Use Residential Property for Commercial Use
Having extra income, constantly flowing in can make all the difference in the current economy. Getting creative with how you...
Running a Business? How to Minimize Supply Chain Issues
Supply chain issues have always been an issue for businesses but over the last few years, the effect and widespread...
How to Increase Your House Value Before Selling
Increasing home value is the first step to making your place more attractive for future buyers. Whether you are trying...
Why Calorie Control Is Still The Best Way To Diet
There are a great deal of different options when it comes to dieting, every day there seems to be a...
The Benefits Of Trade Credit Insurance For Your Business
Trade credit insurance provides cover for businesses who trade on a credit basis. If the people who owe money for...
5 Charming Restaurant Decor Ideas In 2022
Making your restaurant memorable and stand out is a feat worthy of praise. The sheer pressure of wanting to succeed...
Bank Won’t Fund Your Business? 4 Loan Alternatives To Get You Started
Businesses typically require some sort of collateral or proof of concept before funding their business venture. However, it is possible...
Planning A Stag Do
If you’re a Best Man then you’re in a unique position of responsibility, and before the day itself when you’ll...
What Triggers Eczema | Tips to Reduce Eczema Flare-Ups
Eczema is a skin condition that can induce redness, itchiness, and skin inflammation. Its root cause is not fully understood,...
Women’s Fashion Trends To Expect In 2022
A new year means new fashion trends. We cannot wait for what is in store in 2022. It seems that...
Home Makeover Trends: Insights from The Pros
Are you considering a home makeover but don’t know where to start? You’re in luck! In this article, we will...
Interior Design Trends 2022
We all spend time pining over other people’s interior’s on Pinterest or Instagram, but with these trends, it’s easy to...
Top Commonly Overlooked Car Maintenance and Repairs
Maintaining a car is a huge responsibility. There’s a lot that goes into that given how complicated a machine it...
What Is The Difference Between Strata and Property Manager
Real estate is a diverse market, and as such, it can be hard to determine the differences between various types...
Sleek Home Upgrades That Will Luxe Up Your Life
Sometimes we need a vast endeavor to make our home look extravagant and cheek but very often you can implement...
Tech7 years ago
Creating An e-Commerce Website
Tech7 years ago
Design Template Guidelines For Mobile Apps
Business6 years ago
The Key Types Of Brochure Printing Services
Business2 years ago
What Is AdsSupply? A Comprehensive Review
Travel10 years ago
Who Else Wants Also Nfl Hat
General7 years ago
Kobe Bryant With His Unique Nba Jerseys
Tech8 years ago
Why Small Businesses Can't Ignore Mobile Technology
Tech7 years ago
Climb Google Using These Checklists