What if I do not renew my FD of ₹50,000 after its maturity?

Not renewing a fixed deposit (FD) of ₹50,000 after it matures can lead to different outcomes, depending on the financial institution’s policies. If you don’t take action to renew or withdraw the funds, here’s what usually happens:

• Automatic Renewal: Financial institutions, including banks and Non-banking Financial Companies (NBFCs), automatically renew FDs with the current interest rate for the existing duration. The term of your 3-year deposit, for example, at 6%, may extend to another 3 years, yet the interest rate may rise or decrease.
• Moved to Savings Account: Some financial institutions transfer the matured FD amount to a linked savings account. You’d earn interest at the savings account rate, which is typically much lower than FD rates, reducing your earnings. You can access the funds anytime, but the lower interest might not suit your goals.
• Account Closure: If your FD account stays inactive for a long time, the bank or NBFC may close it and return your money, usually by cheque or transferring it to your linked account. This is rare and only happens after a long period of no activity.