Pre-mature FD Penalty Calculator
Key Takeaway
Premature FD withdrawal typically carries a 0.5–1% penalty on the applicable rate. A 7.5% FD broken early might earn only 6–6.5%. The penalty significantly impacts returns on short-tenure deposits.
Penalty Analysis:
- Accrued interest at booked rate (7.5%): ₹15,427.
- Interest paid under penalty rates (5.5%): ₹11,229.
- Net loss due to premature withdrawal: ₹4,198.
What to do next
Based on your Pre-mature FD Penalty Calculator, here are the tools you should try next:
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Premature FD Closure Penalty Formula
Calculates the interest penalty and lower rate adjustment when a fixed deposit is broken before the scheduled maturity.
Worked Example: Breaking ₹2 Lakhs FD at 12 months (Original 36M rate: 7.5%, Completed 12M rate: 6.5%, Penalty: 1%)
Premature FD Closure: The heavy interest cost of breaking deposits
Rahul broke a ₹2 Lakhs FD after 12 months due to a sudden cash requirement. The FD was originally booked for 36 months at a 7.5% interest rate. The bank charged a 1% premature withdrawal penalty.
The bank paid the interest rate for the completed tenure (6.5%) minus the 1% penalty, reducing his payout rate to 5.5%. Rahul received ₹11,151 in interest instead of the ₹15,506 accrued, losing ₹4,355 to the penalty.
Breaking an FD prematurely results in a lower interest rate matching the completed tenure, plus an additional 0.5-1% penalty deduction.
Before breaking an FD, compare the penalty cost with taking a cheap overdraft loan against the FD (typically charged at FD rate + 1%).
Frequently Asked Questions
How do banks charge premature FD penalties?
Banks deduct 0.5% to 1.0% from the interest rate applicable for the actual period the deposit remained with the bank, not the original booked rate.
Can I avoid premature FD closure fees?
Some banks waive penalties for senior citizens or if the funds are reinvested in a longer-tenure deposit within the same bank.
Should I break an FD or take a loan against it?
If the deposit is near maturity, taking a loan against FD (charged at FD rate + 1%) is often cheaper than paying a premature closure penalty.
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