How to Close a Fixed Deposit (FD) Account

A Fixed Deposit (FD) is a secure investment option that offers predictable returns over a fixed tenure. However, there may be instances when you need to close your FD account, either after its maturity or prematurely due to financial needs. Here's a step-by-step guide to help you navigate FD closures effectively.

Types of FD Closures

1. Closure on Maturity:

   • The maturity proceeds are automatically credited to your linked savings or current account.

   • You can set instructions for auto-renewal or auto-liquidation.

2. Premature Closure:

   • You can withdraw the FD amount before maturity by submitting a request online or offline.

   • Note that premature withdrawals usually attract penalties ranging from 0.5% to 2% of the interest earned.

General Steps to Close an FD Account

Online Process:

1. Log in to your bank's internet banking portal using your credentials.

2. Navigate to the 'Fixed Deposits' or 'Term Deposits' section.

3. Select the FD account you wish to close.

4. Choose the closure option (e.g., "Premature Withdrawal" or "Matured FD").

5. Confirm the details and complete the process by entering your OTP or transaction password.

6. The FD amount will be credited to your source account.

Offline Process:

1. Visit your bank branch.

2. Submit an FD closure form along with the original FD receipt.

3. Provide a valid ID proof for verification.

4. Upon successful processing, the FD amount will be credited to your linked account or issued via cheque.

Bank-Specific FD Closure Processes

HDFC Bank:

• Login to NetBanking → Go to 'Fixed Deposit' → Select 'Liquidate Fixed Deposit' → Confirm the details.

• The amount will be credited to your linked account. Partial withdrawals are not allowed.

ICICI Bank:

• Login to NetBanking → Click on 'Deposits' → Select 'Service Requests' → Choose 'Premature Withdrawal' → Authenticate with OTP.

• Amount is transferred to the selected account.

SBI Bank:

• Login to NetBanking → Go to 'Fixed Deposit' → Select 'e-TDR/e-STDR' → Choose 'Close Account Permanently' → Verify with OTP.

• Instant credit is available for requests made between 8 AM and 8 PM.

Axis Bank:

• Login to NetBanking → Navigate to 'Deposits' → Choose 'Break FD' → Confirm the transfer account → Submit.

Things to Keep in Mind for Premature FD Closure

1. Tax-Saving FDs:

   • These cannot be withdrawn before the lock-in period of 5 years expires.

2. Partial Withdrawals:

   • Not all banks allow partial withdrawals. Check this feature before opening the FD.

3. Penalties:

   • Understand the penalty rates for premature withdrawals, as they vary across banks.

4. Documentation:

   • Ensure you have your FD receipt and valid ID proof ready for offline closures.

Alternatives to Premature FD Closure

If you’re considering breaking your FD prematurely, here are some alternatives to explore:

1. Loan Against FD:

   • Borrow up to 90% of your FD amount at a lower interest rate without breaking the FD.

2. Credit Card Against FD:

   • Secure a credit card against your FD to meet short-term expenses without penalties.

3. Split FDs:

   • Invest in multiple FDs with smaller amounts. This way, you can close one FD in case of emergencies while earning interest on the remaining ones.

Conclusion

Closing an FD is a straightforward process, but it’s important to evaluate your financial situation before doing so. For premature withdrawals, explore alternatives to minimize penalties and maintain your financial goals. Always read your bank’s FD terms and conditions carefully before investing to avoid any surprises later.