Can you prematurely withdraw from an FD?

Yes, you can prematurely withdraw from a Fixed Deposit (FD), but it comes with certain conditions and penalties. Premature withdrawal means closing your FD before its maturity date. Premature FD withdrawal usually attracts a penalty that is deducted from the principal deposited. This penalty percentage varies across financial institutions and FD tenure.

The primary consequence of early withdrawal is the loss of the originally agreed-upon higher interest rate. The financial institution will recalculate the interest based on the actual duration the funds remained deposited, and a penalty may be levied, further reducing the final payout. This penalty percentage varies depending on the institution and the FD's tenure.

However, most financial institutions require you to hold the FD during the lock-in period before you can withdraw it prematurely. For example, some financial institutions may require at least 3 months before you can close the FD prematurely.

While premature withdrawal offers flexibility in accessing your funds, it can impact your overall returns from FD. You can also opt for loan on deposit and can get up to 75%* of your deposit amount.