In urgent need of money? Puzzled and thoughtless what to exactly do? The best you can do is look at your fixed deposit and think of withdrawing the entire sum. But while this amount was not meant to be embarked for an emergency situation, rather for your child’s education, what are you going to do now? While it took you a lot of struggle to save an amount and finally opt for a fixed deposit, it cannot just go in vain, right?
Tit Bits of a Fixed Deposit
With the inflation and various fluctuations in the share market, it has become the most optimum solution to opt for a fixed deposit- secured and safe. While fixed deposit is meant for a particular time frame, withdrawing it before the stipulated time of maturity is not going to make it worthy enough.
But while the need of money is equally troublesome, individuals get prompt by the idea of breaking the FD. Let us break it this way for you. Say you invested an amount of Rs. 8 lakhs for a period of five years at an interest rate of 10% per annum. So, calculating the total amount and after the end of the term period, the amount would stand to Rs. 11.3 lakhs, which means an additional profit of Rs. 4.3 lakhs.
So, if the FD is withdrawn after a period of 1 year, an additional penalty of 2% is needed to be paid, which would bring down the initial investment amount to Rs 7.54 lakhs, instead of a total profit of Rs. 11.3 lakhs. So, in this scenario, if you are in urgent need of money, the first thing to do is to consult a financial advisor, an expert who can show you alternate ways than breaking your FD.
So, while there can be many optimum solutions to your problem, there are some of the easily available ways that can bring you out of this situation. Take a look.
- Loan against FD: If you’re unaware of this fact, then this is the most simplest and convenient ways to survive in a financial crisis situation. There are lenders who can arrange this short term loans for you. While this may incur an interest rate, normally 2% higher than the original FD rate, an amount up to 90% of the FD’s amount may also be granted as a loan. Even a personal loan can also be helpful in such situation. The only difference is that it doesn’t depend on the amount of your FD, but depends on the amount you are eligible for.
- Overdraft against FD: A fixed deposit makes you eligible for an overdraft limited to a certain amount. While loan can be repaid over a long tenure, this short term process asks you to repay it back within months.
So, while these methods give you access to some quick funds, opt for such options rather breaking your Fixed Deposit. Remember, when it gets matured after the complete term, the advantage is what you get only then!