When it comes to some of the best investment tools available today, one of the best vehicles that have stood the test of time is none other than the Fixed Deposits or FDs.
Compared to many modern-day investment tools such as mutual funds, stocks, equities and more, Fixed Deposits are considered safe and rewarding for all.
The major reason why Fixed Deposit scores over other investment tools being the guarantee of pocketing sure-shot return on investments. The ROI of the Fixed Deposit is not hampered as it’s not affected by fluctuations of the market.
While the Fixed Deposit provides you the option of liquidity in case you need money, the premature withdrawal of Fixed Deposit is not considered a smart move. When you decide to go ahead with the premature withdrawal of FD, you lose the ‘Fixed Deposit interest rates’ income that you earned so far as you get only the deposited money back.
Let’s see why the premature FD closure is bad and should be avoided
1) You Face Some Penalties
Opting for the withdrawal of the Fixed Deposit account before the end of the tenor will see you paying high amount-based penalties. Hence, the purpose of your Fixed Deposit account will serve no purpose and on top of that, you will also lose the interest income.
2) You Will Lose Your FD ROI
The purpose of your Fixed Deposit will be availing of the interest income at the end of the tenor. However, when you opt to settle for a premature FD closure, you also lose the higher interest income that you were supposed to earn at the end of the tenor.
3) You Cut Your Growth
Over a period of time, every Fixed Deposit scheme matures into an attractive figure. The longer you keep invested in an FD scheme, the higher will be your FD value. Once your initial investment grows, you can easily use it for asset purchasing or holidays purposes. Nonetheless, opting for the premature withdrawal of FD account does not let your investment to grow and you cut all growth ties. Hence, not letting your investment such as the Fixed Deposit keeps you off the matured amount.
4) You Plunge into a Financial Uncertainty
This is crucial for people, especially senior citizens who have invested in a Fixed Deposit scheme for availing a higher gain. Opting to withdraw the Fixed Deposit prematurely can see them plunging into future financial uncertainty. Hence, you are poised to do away with your future source of income and this will make you jittery when it comes to making some expenses. If you are in an urgent need of money, breaking your FD will not be a good idea as you can avail a loan against Fixed Deposit to cover your needs. Like this, you will not only keep invested in the FD scheme but even let you lose the interest income.
5) You Need to Follow a Tiring Process
Just like other transaction procedures, even withdrawal of the Fixed Deposit before its maturity comes with its share of formalities. You may have to fill out many forms and submit a variety of documents which will be verified. Once done with all these, only then you will only get your originally invested amount back without interest and after payment of the penalties. You should use FD premature withdrawal calculator before you withdraw it. All in all, the premature withdrawal of Fixed Deposit is always a bad idea which may not serve the purpose of investment.
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