Fixed deposits (FDs) are among the most popular investments today. This is due to their high interest rates and guaranteed returns. One of the most popular fixed deposit is the Shriram Fixed Deposit. However, it is essential to note that when you invest in a fixed deposit, you agree to the bank or NBFC’s terms and conditions, including a minimum lock-in period. This is a known fact, but have you ever wondered what would happen if you do not renew or withdraw your money?
Let’s take a look what will happen in a scenario where a fixed deposit is neither renewed nor withdrawn.
Consequences of Withdrawing Your FD Early
If you have a fixed deposit that has matured and you do not renew it or withdraw the money, there are a few things that could happen.
- The bank or NBFC could automatically renew your fixed deposit for the same term as the original. It means you would continue to earn interest at the same rate for the same period. However, you may not want to keep your money in a fixed deposit for another term if interest rates have increased. In this case, you would need to go to the bank or NBFC and close your account or you can do the same online. But this could be different when it comes to Shriram Fixed Deposit as we provide 0.25%* p.a. upon renewal of the fixed deposit.
- The bank could keep your money in a savings account instead of renewing your fixed deposit. It means that you would still have access to your money and would be earning interest as per interest rate applicable on your saving account.
- The bank could close your account and return your money to you. It is usually only done if you have been inactive in your account for an extended period.
Whatever option the bank chooses, it is essential to remember that withdrawing your fixed deposit early will usually result in penalties. It can include losing some or all of the interest you have earned and being charged a fee by the bank. It is always best to check with your bank or NBFC before making any decisions about withdrawing a fixed deposit so that you know what charges will apply.
How to Renew or Withdraw Your Fixed Deposit
If you have a fixed deposit account with a bank or NBFC, you are typically required to give notice before withdrawing any funds. The financial institution needs time to arrange for the funds to be transferred from your account. Depending on the policy, you may be required to give notice anywhere from 7 days to 1 month before withdrawing funds from your fixed deposit account. Shriram Fixed Deposit gives its customers regular updates about their fixed deposits so that they do not miss any crucial information about their FDs.
Benefits of Renewing Your Fixed Deposit
You reinvest your money for a period when you renew your fixed deposit. It has the following benefits:
- You can take advantage of compounding interest, which is significantly higher for Shriram Fixed Deposit plans.
- Your money is locked away for the term, so you won't be able to spend it.
- You may get a higher interest rate if you renew early.
- You can continue growing your savings without making any additional deposits.
Of course, there are also some downsides to renewing your fixed deposit. For instance, if interest rates have gone down since you first invested, you may get a lower rate on your renewal. Additionally, if you need access to your money before the end of the term, you will likely incur some nominal penalties.
Whether or not renewing your fixed deposit is a good idea depends on your circumstances and financial goals. If you're happy with the current interest rate and do not need the money anytime soon, then renewing may be a sensible option. However, if interest rates have dropped or you might need the cash sooner than expected, it is better to withdraw your money and reinvest it elsewhere. It is always a great idea to calculate your premature withdrawal penalties and know your returns from the new investment before you make a decision.
Process of Renewing a Fixed Deposit
When you open a fixed deposit account, you will be asked to choose the tenure of your deposit. The typical tenures are 1 to 10 years. At the end of the chosen tenure, your deposit will mature, and you can either withdraw the money or renew your deposit for another term. It is essential to check with your bank or NBFC about their policy on auto-renewals before opening a fixed deposit account. Your bank or NBFC will then renew your deposit for the chosen term and update interest rate accordingly.
What is the Process of Withdrawing Your Fixed Deposit?
The process of withdrawing your fixed deposit is simple. You can either visit the branch where you opened the account and fill out a withdrawal form, or you can do it online for some institutions such as Shriram Fixed Deposit through their official website.
You will need to provide your account number, other identifying information, and the amount you wish to withdraw. The bank may require that you give them notice of your intention to withdraw the funds, and they may also charge a penalty for early withdrawal.
Auto-Renewal and Auto Withdrawal of Fixed Deposits
When you open a fixed deposit account, you agree to keep the money in the account for a set period, usually 1 to 5 years. You can withdraw your money plus interest at the end of the term.
If you do not renew or withdraw your fixed deposit, the bank will automatically renew the deposit for another term at the same interest rate. If you want to withdraw your money before the end of the term, you may have to pay the penalty.
The bank may also automatically withdraw your money from the account if you do not meet the minimum balance requirements. Some banks offer their fixed deposit accounts auto-renewal and auto-withdrawal options. It allows you to set up a recurring payment from your bank account each month, quarter, or even year. This will automatically renew the fixed deposit and keep it running until you decide to withdraw the funds. Shriram Fixed Deposit can be a convenient way to ensure your money is working hard for you every day.
Not renewing or withdrawing your fixed deposit can lead to several issues. You must be aware of the implications and plan for them in advance. You should also ensure that you keep up to date with the terms and conditions associated with your account so that you do not suffer any unwanted penalties. Taking these steps will make it easier for you to make informed decisions about when you should renew or withdraw your fixed deposits. Additionally, if you want to invest in a hassle-free long-term fixed deposit scheme, invest now in Shriram Unnati Fixed Deposit which offers competitive interest rates for your funds.
1. What happens if I don't renew or withdraw my fixed deposit?
If you don't renew your fixed deposit, the money is automatically rolled over into your next term. If you withdraw your fixed deposit before it matures, the remaining balance will be returned to you.
2. What are the penalties for early withdrawal of a fixed deposit?
The penalties for early withdrawal of a fixed deposit vary from banks to NBFCs. Some banks or NBFC will charge you a fee, while others may not charge anything at all. This can make it difficult to predict what your financial institution will do if you withdraw money before it's due.
3. Can I renew my fixed deposit before it matures?
Yes, you can renew your fixed deposit before it matures. You can do so by visiting the branch of where you have opened the account and informing them about your intention to renew or you can do it online. The bank or NBFC will then provide you with a new maturity date for your deposit.
4. What happens to my fixed deposit if I die before it matures?
The answer to this question depends on whether or not you have named a beneficiary. If you have named a beneficiary, your fixed deposit will continue to earn interest till maturity. However, if you have not named a beneficiary, the surviving spouse or dependent children will inherit your fixed deposit.
5. Can I renew my fixed deposit if I am travelling abroad?
In some cases yes, but the bank or NBFC would require formal authorization from your end to renew your fixed deposit. Some institutions require your personal presence to sign certain documents for FD renewal.
- It is essential to note that when you make a fixed deposit, you agree to the terms and conditions, including a minimum lock-in period.
- The bank could automatically renew your fixed deposit for the same term as the original.
- It is essential to check with your financial institution about their policy on auto-renewals before opening a fixed deposit account.
- The bank or NBFC may also automatically withdraw your money from the account if you do not meet the minimum balance requirements.
- You should also ensure that you keep yourself updated with the terms and conditions associated with your account so that you do not suffer any unwanted penalties.