Fixed Deposits are commonly chosen for their structured returns and defined tenure.
When a fixed deposit reaches maturity, investors typically choose between withdrawing the proceeds or renewing the deposit. In certain cases, renewal may include an additional interest benefit, depending on the financial institution’s policy.
Fixed Deposits are known for their structured tenure and fixed returns as per applicable terms. Understanding how renewal works, including any additional interest offered at the time of renewal, can help investors make an informed decision.
This article explains how FD renewal operates and what factors to consider before opting for renewal.
Key Highlights
- When the fixed deposit matures, there are two options to be given either withdrawal or renewal.
- Renewal may include an additional interest benefit, subject to applicable terms.
- The auto-renewal option is wise for those who do not need that money to use it shortly.
- If the interest rates have increased one will be to avail that increased interest rate upon renewal.
Unlock Extra Interest Rewards
Renewing a Fixed Deposit may allow investors to continue earning interest at the applicable rate prevailing at the time of renewal. Some financial institutions may offer an additional interest benefit on renewal, subject to policy terms.
Shriram Finance offers an additional interest benefit of 0.15%* p.a. on renewal of fixed deposits.
Perks of Renewing Fixed Deposits
Maximise Your Earnings:
FD renewal allows you to capitalise on the power of compounding, boosting your returns significantly over time. By reinvesting your matured FD at attractive interest rates, you create a snowball effect, multiplying your savings effortlessly.
Seamless Investment Process:
Renewing your FD is hassle-free and requires minimal effort. With just a few clicks or a visit to your financial institution, you can continue your investment journey without any complications, making it a convenient option for busy individuals.
Lock-in Security:
By renewing your FD, the interest rate applicable at the time of renewal will apply for the chosen tenure, providing defined returns as per the agreed terms.
Flexibility of Tenure:
FD renewal provides you with the flexibility to choose a tenure that aligns perfectly with your financial goals. Whether you want to reinvest for a short-term gain or a longer period, the choice is entirely yours.
Leverage Higher Interest Rates:
In some cases, financial institutions may provide an additional interest benefit on FD renewal, subject to their policy terms. Investors can review the applicable interest rate at the time of renewal before deciding to reinvest.
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 maximise the fixed deposit renewal additional rate of interest
If you have invested in multiple fixed deposit schemes, maybe you will face difficulties in tracking. You should select the auto-renewal option offered by financial institutions. It saves the time of depositors.
The auto-renewal policy for fixed deposits varies across financial institutions. In some cases, the deposit may be renewed for the same tenure as the original term, depending on institutional policy.
However, the interest rate applied at renewal will be the prevailing rate at that time. Investors opting for manual renewal may review available tenure options, as interest rates can differ based on the selected duration.
Shriram Fixed Deposit Renewal Process
At the time of investment, the customer can either choose auto-renewal or auto-debit (The maturity amount will be deposited in the account provided by the customer while opening an FD).
If the customer has not selected anything, reminders may be sent prior to maturity to enable them to choose between renewal or withdrawal of the maturity proceeds.
If renewal is selected, the customer can choose the tenure and the amount to be reinvested. The reinvested amount may be lower than the maturity amount; however, the investment amount cannot be increased at the time of renewal. The renewed FD will carry the interest rate prevailing at the time of renewal along with an additional interest benefit of 0.15%* p.a., subject to applicable terms.
If no instructions are provided, reinvestment may be processed as per the institution’s policy.
In the event that the customer has not opted for any of the above-mentioned options then the customer will be sent reminders at regular intervals before maturity to choose whether to renew or to get the maturity amount back to their bank account. Upon choosing renewal at this stage the customer will be provided the option to choose the tenure and the amount they would like to reinvest in their renewal (Note: The customer has the option to decrease the reinvested amount from the maturity amount, but they are not allowed to increase their investment during renewal). Once the tenure and principal amount is decided they will be able to renew their FD with an additional interest along with the existing interest rate at the time of renewal.
Conclusion
Renewing a Fixed Deposit allows investors to continue earning interest based on the applicable rate at the time of renewal. Investors should review prevailing rates and tenure options before making a decision.
Shriram Fixed Deposit offers interest rates up to 8.15%* p.a., inclusive of an additional 0.50%* p.a. for senior citizens, 0.05%* p.a. for women depositors, and 0.15%* p.a. on renewal of a Shriram Fixed Deposit.
FAQs
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. You have the option to renew your FD at Shriram Finance through both online and offline channels.
Is there any penalty on premature withdrawal of fixed deposits?
Penalty charges for premature withdrawal of fixed deposits differ among financial institutions. It could involve a specific fee or a reduction in the interest amount from the FD.
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 and you can automatically break the fixed deposit either through net banking or mobile banking. On your instructions, the financial institution will credit the amount back to your account.