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How To Close A Fixed Deposit On Maturity?

    Fixed deposits are among the most popular investment options in India. They are easy to work with, don’t require a lot of understanding and come with handsome rates of interest. Fixed deposits serve as a sure shot way to keep your capital safe and in times of need, they can be liquidated rather easily. People can invest in FDs for a period of 7 days to 10 years, depending on their requirements.

    People don’t usually face a lot of difficulties when they apply for a fixed deposit account, but most of them have a common question - how to close it on maturity. In this article, we are going to address this very question.


    What Happens to a Fixed Deposit when it Matures?

    Generally speaking, banks deal with matured fixed deposits in either of the two ways:

    • The FD is renewed automatically for the original term or a period of one year, depending on the tenure set by the holder.
    • The principal and the interest amount are liquidated automatically and transferred into the holder’s account.


    If you are looking to close the fixed deposit account on maturity, here is how you can go about it:

    • Visit the bank and submit the fixed deposit certificate with all the necessary signatures of the account holders.
    • You will be asked for further instructions - whether you want to close the FD, renew it, move the funds into a new FD/investment or withdraw some of the funds and leave the rest in the FD.
    • You may be asked to submit a letter indicating the same with all the necessary details mentioned in it.

    Upon successful closure of the fixed deposit account, all the maturity proceeds with the original investment will be transferred into your account. At the time of opening your FD, you can also leave standing instructions with the bank on what to do after it matures.

    If you opened your FD account online through internet banking opened your FD account online through internet banking, your job of closing it on maturity becomes a whole lot easier. All you have to do is access your net banking account and visit the fixed deposits section. There, you can view the status of your investment with the option to close/liquidate it. A few clicks and you are good to go.


    What Happens if I Close my Fixed Deposit Prematurely?

    Banks usually allow their customers to close their fixed deposits well before the date of maturity. In this case, you won’t get the full interest on your investment (as your tenure is reduced) and a penalty may be levied. In other words, the interest will be paid only for the period you kept your deposit with the bank. Upon closing the FD, the funds will be transferred to your account as usual.

    Once again, you can do so by visiting the local branch of your bank with the fixed deposit certificate, with all the instructions mentioned. You may be required to fill up a form requiring you to mention how to direct the funds - whether you want to make a partial withdrawal, complete withdrawal, or invest the sum into a new fixed deposit.

    On the other hand, if you are operating the FD online, then you can close it prematurely through net banking. The instructions are pretty much similar to the one that we just saw.

    If you need to close your FD before the date of maturity, whatever may be the reason, be sure to evaluate the penalty charge (if applicable) and the loss in interest that you will incur. Depending on your personal requirements, you can withdraw only a part of the deposit while leaving the rest to accrue interest.

    At the time of opening your fixed deposit account, be sure to inquire about the closing terms with your bank executive. Familiarise yourself with closure on maturity and early closure, along with any relevant charges that may be levied. Many FDs also come with a fixed lock-in period, that is, you can’t liquidate it for a certain time - this may prove to be a good investment vehicle if you have a lumpsum to invest. It is also advised to check the terms and conditions on your deposit certificate.

    Know more about what is a fixed deposit and how does bank calculate interest on FD

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