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A Fixed deposit account can be closed whenever you are planning to do so. It is usually seen that the bank provides you with a small receipt named Term Deposit Receipt. This needs to be taken along with you when you are going to the bank for the closure of a Fixed Deposit Account.
Reasons for closing an FD
There are quite a few reasons for closing the Fixed Deposit Account. The reason could be an emergency or a situation that provides benefits to the individual after having closed the fixed deposit account.
- Usually, it is seen that an FD is closed in case there is a financial emergency
- Often, it is also seen that in the case of new fixed deposit accounts, the accounts are closed if an individual is provided a higher rate of interest from the other bank.
Procedure for Closing a Fixed Deposit
A fixed deposit can be closed in two ways. One way is to close the FD before its maturity date is completed and the other way is after the completion of its maturity date.
If you are closing your fixed deposit account before the completion of its maturity date, you will receive a lesser effective interest rate. If you are willing to close an FD account before the completion of its maturity date, you need to have a deposit certificate which will be considered as a proof. If you are closing your FD before it is matured, you will be asked to pay some amount as premature closing charges.
It is better to have the Original certificates, but it is also important to have the Photocopies of the original certificate. The photocopies will prove to be beneficial if you have lost your original certificate.
While applying for an FD, you will receive the receipt of a deposit certificate. This has to be taken along while you are going to close the FD account.
When you had applied for a fixed deposit, the bank must have issued a deposit certificate and you have to carry to the bank to close a fixed deposit. In case you have lost it you can fill up a premature FD breaking form available at the bank. The procedure is very simple.
Sample Letter for Closing a Fixed Deposit Account
From: Your name and address
The Branch manager
Subject: Request for closure of the fixed deposit account belonging to me
This letter is written to appeal you to close the fixed deposit account I am holding. I need to close this account because the maturity period has been completed and I am need of money for few personal reasons. I have attached all the required documents in this mail.
I hope you will process my request at the earliest.
XYZ (Your Name).
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How to Close Fixed Deposit FAQs:
1. What is the penalty for premature closure of a Fixed Deposit?
Different banks charge different amounts as the penalty for pre-closing of an FD before it has completed its maturity. So the charges for the penalty depends on the particular bank that has been chosen by you while opening a Fixed Deposit Account.
2. Can I close my Fixed Deposit Account Online?
Yes, you can close your FD Account online only if it was opened online. It also depends on the type of FD.
3. Can I close my Fixed Deposit via Net Banking?
Yes, you can close the FD Account via net banking only if you had opened it via net banking. Otherwise, you need to go to the respective bank’s branch.
4. What are the penalty charges for premature closure of a fixed deposit account?
The penalty charges for premature closure of a fixed deposit account varies from one lending institution to another. They also depend on the time of closing the fixed deposit account.
5. Will I be able to close the Fixed Deposit account online?
Yes, you may close your Fixed Deposit account online by selecting the “Close A/c” tab option on your respective bank’s online portal.
6. Is there a need for the signatures of all depositors when a Fixed Deposit Account is closed?
Yes, it is important that all the signatures of all the depositors are there with you when you have planned to close the Fixed Deposit Account before the completion of its maturity period.
7. Is there a better alternative than closing an FD account, to multiply my investments?
If you take a loan against fixed deposits, you will be able to manage your finances in a better way when compared to closing your FD. So it is advised to take a loan against an FD rather than closing the FD.
8. How much amount of interest will be deducted if I withdraw a certain amount from my FD Account in the 7th month?
Banks charge around 0.4 – 1.2% rate of interest for a premature withdrawal. These charges depend on the type of banks i.e. a private bank or a PSU Bank
9. Should close my fixed deposit account if I am an NRI who has returned back India?
It is better to close your fixed deposit account and invest in another option that is more liquid than the fixed deposits.
10. Is there a lock in period for few types of FDs?
Yes, some FDs have an initial lock period that is applicable in the case of some corporate FDs.
11. What happens if there is a lock in period for an FD?
If there is a lock in period towards an FD, it cannot be closed until the completion of the lock-in period.
- Loan Closure
- Debit Card Closure
- Credit Card Closure
- Secured Credit Card Closure
- Salary Account Closure
- Savings Account Closure
- Redeem Mutual Fund Units
- Close Fixed Deposit