How to Close Your Fixed Deposit Account Easily

What is FD (Fixed Deposit)?

FD or Fixed Deposit is a type of savings option offered by banks. You deposit a lump sum for a fixed tenure and earn a fixed interest rate on it. The interest rate is decided at the time of account opening.

FDs are popular because they are low-risk. They also allow tax-saving options through special 5-year FDs under Section 80C of the Income Tax Act.¹

FD Close Application Process

Submitting an FD close application is simple and typically involves the following steps:

1. Download or collect the form (FD Closure Request Form)
2. Enter required details – FD account number, name, and reason for closure
3. Attach ID proof – Aadhaar or PAN card copy
4. Submit the form – At the bank branch or upload online
5. Receive credit – The FD amount, after applicable charges, will be sent to your account

You can also request closure instructions in advance if your FD is nearing maturity. The above mentioned process may vary depending up on the bank or financial institutions. It is better to contact your financial institute for better understanding of the process to close your FD.

Important Tips Before Closing a FD

Below are a few points to consider before closing your Fixed Deposit (FD):

1. Check for extra charges: If you take out your money early, the bank may not give you the full interest. They might reduce the amount a little as a penalty.
2. A loan may help: Some banks let you take a loan using your FD instead of breaking it. This way, you still get interest and also get the money you need.²
3. Some FDs can't be closed early: If your FD is for saving tax, it may have a lock-in period (usually 5 years).
4. Have a backup fund: Always try to keep a small emergency fund separate. This helps you manage sudden expenses without touching your FD.

Conclusion

The correct approach to closing a Fixed Deposits enables you to manage penalties while developing informed financial choices. Review bank terms before starting any FD closure application or FD withdrawal application

FAQs

1. What does it mean to close  a FD?

 Closing a  FD means withdrawing your deposited amount before the agreed maturity date. While it's possible, banks may reduce the interest earned or apply a penalty.

2. How can I close  my FD online?

To break an FD online, log in to your bank’s internet banking or mobile app. Go to the Fixed Deposit section, select the FD account, choose the premature closure option, and confirm your request. The amount gets credited to your savings account. This process may differ from Bank to Bank.

3. Can I close  FD before maturity?

Yes, you can withdraw your FD before maturity. However, banks usually charge a penalty or reduce the interest rate. The terms vary by bank, so it’s best to check the conditions before requesting early closure of your deposit.¹

4. What documents are required to close an FD?

To close an FD, you may need the FD account number, a filled FD closure form, and valid ID proof like PAN card or Aadhaar. If closing offline, carry a cancelled cheque or savings account details for a refund credit. This may vary from bank to bank¹

5. What is the penalty for breaking FD early?

Banks generally deduct a small percentage—around 0.5% to 1%—from the interest rate as a penalty. ⁴

6. How to check FD closing  status?

You can check the status of your FD closure request using internet banking or the bank’s mobile app. Banks also send confirmation updates via SMS or email once the FD has been successfully closed and the amount is credited.

7. How to get FD closure form online?

Visit your bank’s official website or internet banking portal. Search for “FD Closure Form” or go to the forms/downloads section. Download the form, fill it with your details, and submit it online or at the nearest branch. ¹

8. Will I receive interest if I break FD early?

Your interest accrues according to the FD term duration, and the financial institution may apply a lower interest rate for short periods of holding the deposit. Your bank will determine the final amount based on its specific rules against premature withdrawals, along with the rate of interest adjustment.¹

9. What happens if I close  FD before 7 days of booking?

If a FD is prematurely closed within the first 7 days of booking, you will generally not receive any interest and only the principal amount will be returned .¹

10. How do I write a FD closure letter?

Create a letter containing your complete name as well as your FD account number alongside your savings account number and your specified reason for account closure. Send your request to the bank to terminate the FD while asking for a fund transfer. Add your signature to the letter while including PAN or Aadhaar identification documents. ³

References:

1. https://groww.in/fixed-deposits/types-of-fixed-deposit
2. https://www.moneycontrol.com/news/business/personal-finance/should-you-break-your-fixed-deposit-or-take-a-loan-against-it-here-s-how-to-decide-12993460-12993691.html/amp
3. https://www.lettersformats.com/2018/08/closing-term-fixed-deposit-fd-in-bank-before-after-maturity.html
4. https://economictimes.indiatimes.com/wealth/invest/latest-fd-premature-withdrawal-charges-2024-sbi-vs-hdfc-bank-vs-icici-bank-vs-pnb-vs-yes-bank-vs-bank-of-india/articleshow/115476773.cms?from=mdr