Get to know the fixed deposit: Fixed Deposit (FD): This remains the best option for people looking to invest. The reason for this is their long-standing confidence in this plan. In this scheme, investors can be sure that their money is safe and can expect guaranteed returns. DFs come with a variety of conditions.
How to avoid losses?
The post office offers fixed deposit options for 1, 2, 3 and 5 years, while the bank offers fixed deposits for terms ranging from 7 days to 10 years. Everyone’s interest rate is also different. However, people often unexpectedly feel the need for cash after investing in fixed deposits, so they withdraw their money prematurely. Banks will charge you a penalty if you cancel your FD prematurely. In such a scenario, you will not get the full benefit.
How can you avoid this pitfall? If you withdraw money from FD before maturity, you will not get the expected interest. As per SBI rules, a penalty is imposed for premature withdrawal of FD interest. If an FD up to Rs 5 lakh is broken before maturity, a penalty of 0.50% will have to be paid. Similarly, for premature withdrawal of FDs between Rs 5 lakh and less than Rs 1 crore, a penalty of 1% will have to be paid. Additionally, your interest rate can be as low as 1%.
There are two ways to prevent errors.
There are two ways to avoid the FD premature liquidation error. If you think you will need funds before your FD matures and may have to make premature withdrawals, then it is advisable to choose a short-term FD. An alternative option is to split the money into several smaller FDs instead of putting it in a single FD.
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