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14-11-2022 14:08:45We may face sudden emergencies in our day-to-day lives that may affect our savings and lead us to either apply for a loan or break the investment funds. A Fixed Deposit (FD) is the most traditional savings option preferred by investors of all ages. However, premature withdrawal or breaking of an FD before its maturity incurs a penalty. The interest you earn on a fixed deposit investment is bound to decrease depending on the tenure you have selected for the deposit. Fixed depositminimal documentation if you already hold an account with banks/Non-Banking Financial Companies (NBFCs). An FD offers features like assured returns with high-interest rates at low market risk making it attractive to all investors.Investing in a Shriram Fixed Deposit gets you higher interest rates of up to 9.05%* p.a. per annum, including the additional interest of 0.50%* p.a. for senior citizens and 0.10%* p.a. for women depositors. You can use the Shriram FD calculator to determine the interest earned on the deposit upon maturity. Cumulative and non-cumulative FD plans are also available that allow you to customise the interest payout according to your requirement.Let's look at how a fixed deposit interest is calculated and understand what happens to the interest calculation if the deposit is prematurely withdrawn
When a depositor needs to close their fixed deposit before the maturity date, that is considered a premature withdrawal of an FD. A person may need to access the funds in their deposit during times of emergency. In such a case, the bank or NBFC will allow them to break the FD but will charge a penalty on both partial and whole withdrawal of the fixed deposit.The penalty charges depend on the deposit's tenure and the financial institution's guidelines.
Calculating the interest on a fixed deposit is easy and can be done manually or through an online FD calculator. There are two modes to calculate the interest on an FD: Simple interest and Compound interest.Simple interest is the interest earned on a fixed deposit with the principal amount alone. In contrast, compound interest is the interest earned on both the principal and interest amounts. Let us understand the calculations with respective formula and examples.
Rate of interest per annum = R Simple interest can be calculated as principal x rate of interest x tenure divided by 100.If one invests Rs. 50,000 at 8% per annum for 5 years, the interest would be calculated like this-50,00 x 8 x 5 = 2,000,000.Thus, the simple interest you can get for a 5-year deposit is Rs. 20,000, and your maturity amount becomes Rs. 70,000.
The compound interest is calculated with the principal amount and the interest earned in a year. The same formula is applicable, but the calculation will be done yearly.50,000 x 8 x 1 = 400,000.The interest earned for the first year would be Rs. 4000. This amount is added back to the principal, so the principal for the next year becomes Rs. 54,000 54,000 x 8 x 1 = 4,32,000.This way, the interest earned for the second year would be Rs. 4,320. This interest earned is then compounded yearly, making your maturity amount Rs. 73,457.The maturity amount will vary depending on the type of fixed deposit plan you choose. An easy way to check the interest rate and maturity amount is to choose Shriram FD calculator and start your investment journey.
When a person withdraws an FD before the maturity date, they will not receive the same rate of interest decided at the account's opening. The penalty charges range from 0.50%* p.a. to 1%, depending on the financial institution.There are two ways through which you can calculate the interest after the premature withdrawal of an FD. Let us understand better using cases.
Note: This example is only for indicative purposes. The actual calculation may differ at the withdrawal time and varies for every bank/NBFC.
Although prematurely withdrawing a fixed deposit is easy, it is not advisable as you can be charged a penalty on your deposit. Furthermore, the interest is re-calculated and lowered according to the tenure you have completed with the deposit. You can always avoid breaking an FD by taking a loan A Shriram FD has a flexible tenure that you can use to plan your financial goals efficiently. In addition to higher interest rates, you also get an extra 0.25% interest on all matured Shriram Fixed Deposit renewals.
When a fixed deposit is withdrawn before the maturity date, you will be charged a penalty for breaking the deposit.
You will get the accumulated interest upon prematurely withdrawing the fixed deposit. However, the interest is deducted as a penalty only if the FD has completed the tenure of a few months.
The penalty on an FD is typically charged at 0.50%* p.a. to 1% of the accumulated interest on your deposit.
Yes, a partial amount can be withdrawn from a fixed deposit if your bank or NBFC has a facility to allow it.