Can We Break RD Before Maturity? | Freo (2024)

FAQs

Can We Break RD Before Maturity? | Freo? ›

Rules for premature RD amount withdrawal

The bank/post office might charge a simple interest on the amount, which needs to be paid by the person withdrawing said sum. In case an individual fails to repay the amount withdrawn before the RD matures, the bank/post office will deduct the said amount (with interest) before the maturity sum is paid.

A Recurring Deposit is like a Fixed Deposit. Once the RD amount has been deposited, it cannot be withdrawn until maturity. Partial withdrawals from the account are not allowed.

The depositors can prematurely close their recurring deposit account three years after the date of account opening for which they need to submit an application form named 'Application for Premature Closure of Account' to the post office where they have opened the RD account.

Lock in Period

The Recurring Deposit account has a minimum lock-in period of one month. In the case of premature closure within a month, no interest shall be paid to the depositor and only his principal amount shall be returned.

The penalty for breaking RD before maturity varies depending on the institution. Most banks and financial institutions levy a penalty for premature withdrawal of RD, ranging from 0.5% to 1%, depending on the period remaining until maturity.

On premature withdrawal of RD. The interest will be paid at the rate prevailing on the date of Deposit for the tenure the Deposit remained with the bank or at the contracted rate, whichever is lower post deducting penal charge of 0.5% on premature withdrawal of Deposit.

Penalties or charges for Premature Closure of RD

You must repay the withdrawn amount within the stipulated time. If you fail to pay the same by the due date for a period of more than three months, you can be charged a penalty. The penalty is usually 1.5 to 2.5% of the total borrowed amount.

The interest amount earned at the end of maturity of a Fixed Deposit is higher than the interest earned on an RD. The interest amount earned is lesser than the interest earned on an FD. The interest earned on an RD is paid on maturity along with the capital amount.

What are the disadvantages of RD? ›

Disadvantages of Recurring Deposits

Lower interest rates: RDs are known to feature lower interest rates compared to other investment options such as mutual funds or stocks. Locked: The money deposited in an RD is locked for the predetermined tenure. Premature withdrawal may attract penalties or reduced interest rates.

SBI allows its customers to withdraw their RD money prematurely. If the money is withdrawn before maturity, there will be a nominal penalty. However, SBI doesn't allow partial withdrawals of recurring deposits.

The period or tenure of a recurring deposit ranges between 6 months and 10 years. Once you open an RD account, you cannot alter the tenure till the maturity of the RD. Make sure to choose the tenure as per your requirements to gain maximum returns.

a. Internet Banking: Select FD/RD > Choose Services > Close/Partially Withdraw > Choose FD to be Closed > Enter Net Secure Code & Submit.

ICICI Bank Premature Withdrawal of RD

In case of premature withdrawal, ICICI Bank will calculate interest at the rate applicable for the period the deposit has remained with the bank.

Yes, you may close your RD a/c online through "Close A/c" tab under e-RD, which are created through e-RD only.

Your request for premature closure of the FD/RD will be processed in 1 working day. Please note that we offer option of partial closure of FD for which request can be availed through Phone Banking or by visiting our nearest ICICI Bank branch.

Premature closure and withdrawal are allowed for post office fixed deposits after the completion of 6 months from the date of inception of the deposit. However, the closure of the deposit account before maturity will be subject to penalty.