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Is there any extra interest in FD renewal?

Is there any extra interest in FD renewal?

Is there any extra interest in FD renewal?

The Fixed deposit is the most popular form of investment schemes among the citizens of India. To avail of the FD renewal benefits, one has to keep an eye on the interest earned on renewal or withdrawal of fixed deposits. Research properly about the financial institution where you are going to open a fixed deposit account; it will be a great way of multiplying your hard-earned wealth. It is a risk-free and secured investment scheme that comes with a guaranteed return as promised at the time of opening a fixed deposit.

Does interest increase on renewal of fixed deposit?

To know about additional interest rates on renewal of your existing investment with Shriram Finance, please log in to our Customer portal.

For instance, if you have created a fixed deposit of Rs 3 Lakh at the rate of 10%, on maturity, in case you wish to renew your fixed deposit, it will get renewed at the present interest rate. The amount will be a principal interest amount of 10 years. In short, your amount will also be changed, and interest is applicable on the same. You can even take the help of the Fixed deposit calculator to understand how interest is being calculated on FD renewal and what the FD renewal additional ROI is.

How does the Fixed deposit calculator work?

To find FD re-investment ROI, you can use the free online compound interest calculator. Put the interest rate offered by a bank or financial institution on the calculator, the amount of fixed deposit renewal, and the tenure. It will automatically let you know about the interest on renewal. The calculator is designed based on factors like interest rate and compounding frequency. It could be annual, half-yearly, or quarterly. You can take the help of a Fixed deposit calculator to understand how interest is being calculated on FD renewal.

How does the Fixed Deposit interest rate vary based on Central Bank policy?

The Reserve Bank of India is offering the interest rate to the bank after accessing the economic conditions. RBI keeps on revising the interest rates of fixed deposits as changes take place in the Repo rate.

Repo rate is the rate at which RBI is lending to the banks and other financial institutions.

Important facts related to Fixed deposit renewal

  • When the fixed deposit matures, there are two options to be given either withdrawal or renewal.
  • The FD renewal clause was discussed at the time of creating a fixed deposit. If you have agreed on the same, the bank or financial institutions are authorized to go with auto-renewal for one year.
  • The auto-renewal option is wise for those who do not need that money to use it shortly.
  • If you have not chosen the auto-renewal feature, you need to keep track of the term deposit maturity date. If you forget to renew your fixed deposit on maturity, you have to face hassles in claiming the same post maturity.
  • If you go with premature withdrawal, you may lose the interest amount as penalty charges.

What are the different types of fixed deposits?

Normal Fixed Deposit:

Under this fixed deposit scheme, the money is kept for a fixed tenure. It starts from 7 days and goes up to 10 years. The interest on fixed deposits is higher as compared to the 'Normal savings account.'

Tax-Saving Fixed deposits:

It is wise for those who want to save tax. It gets tax exemption under Section 80C of the Income Tax Act, up to 1.5 Lakh annually. The FD renewal tenure of the tax-saving deposit scheme is five years. This tax-deposit scheme offers a one-time lump-sum deposit only.

Senior-Citizen Fixed Deposit Scheme:

It is applicable for individuals who are above the age of 60 years. The fixed deposit renewal rate for senior citizens is a bit higher, along with the flexible tenure option.

Cumulative Fixed Deposit Scheme:

The interest is compounded quarterly or annually. This option suits well who are having a financial requirement frequently. It is a substantial way to increase the savings.

Non-cumulative fixed deposit scheme:

The interest levied in this scheme is paid out monthly, every 6 months, or annually according to your standing instructions. Mostly the pensioners opt-in for this kind of scheme to make it interest income as their regular source of Income.

Flexi Fixed Deposits Scheme:

It is linked to your bank's savings account. The money floats between your savings account and the fixed deposit.

What happens on withdrawal of Fixed deposits?

If you choose the option to terminate the fixed deposit automatically on maturity, the fund will be credited directly to your mentioned account. It also includes the interest amount.

How do I decide whether to renew the fixed deposit or not?

You should know about making an informed decision regarding your fixed deposit to maximize the fixed deposit renewal additional rate of interest

If you invested in multiple fixed deposit schemes, maybe you face difficulties in tracking. You should select the auto-renewal option offered by banks and financial institutions. Choosing this option will save the interest-earned of the depositor that they might lose due to forgetting the maturity date because of having multiple FDS.u

Secondly, auto-renewal saves the time of depositors. They do have to stand in long queues to put in a request for auto-renewal. It could take place from the comfort of home. Auto-renewal policy of fixed deposit varies from bank to bank. Some banks do FD renewal for the same period that is 1 year in most cases. But there is no surety that in auto-renewal, you are getting the best interest rates. If you are going with the option of manual renewal, there is the possibility that a fixed deposit for 15 months is offering you higher interest as of keeping a fixed deposit for 12 months tenure.


Overall Fixed deposits are one of the safer investment options that make you avail of FD renewal benefits. We Shriram Finance Limited has the most reliable fixed deposit schemes for your secured and better future with [ICRA]AA+ (Stable)” by ICRA and "IND AA+/Stable" by India Ratings and Research. Contact us any time to understand in detail about interest earned on FD renewal.

Frequently Asked Questions

1. What do you mean by maturity instruction?

When you are making a fixed deposit in your respective bank account, all banks and NBFCs ask to give maturity instruction. It states auto-renewal or auto-termination.

2. Is there any provision for online fixed deposit renewal?

Yes, there are many banks and financial institutions that are offering online fixed deposit renewal options to their customers, i.e., mobile banking or net banking.

3. Is there any penalty on premature withdrawal of fixed deposits

The penalty charges on premature withdrawal of fixed deposits vary from one financial institution to another. Some may charge you a certain fee or reduce your interest amount.

4. Can I withdraw a tax-saving fixed deposit also before maturity?

No, you are not allowed to touch your tax-saving fixed deposit account. It has a 5 years lock-in period. So, no one is allowed to make withdrawals.

5. How to break 'Fixed Deposits' at times of financial need?

Financial emergencies never come with notice; they can knock on the door at any point in time, you can automatically break the fixed deposit either through net banking or mobile banking. On your instructions, the bank will credit the amount back to your account.

6. Who is eligible to create fixed deposits?

Here is the list who are eligible to avail of the benefits of creating a fixed deposit:

  • Must be a resident of India
  • NRIs
  • Minors
  • Senior citizens
  • Partnership firms
  • Companies
  • Clubs or societies
  • Sole proprietorship
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