If 5-year post office FD is prematurely withdrawn you will get only savings account interest (2024)

FAQs

If 5-year post office FD is prematurely withdrawn you will get only savings account interest? ›

Further, if a 5-year post office FD is prematurely withdrawn after it completes 4 years, then only post-office savings account interest will be paid for the entire period that the FD has remained with the post office. Post office time deposit is commonly known as post office FD as well.

If you need to withdraw your FD early, here's what you should know: Penalty rates: Penalty rates are levied based on the original tenure of your deposit. For deposits less than Rs 5 crore, the penalty is 0.50% for withdrawals before 1 year, 1.00% for 1 to 5 years and 1.00% to 1.50% for 5 years and above.

a) No post office FD can be withdrawn before the expiry of 6 months from the date of deposit. b) If a 1-year, 2-year, 3-year or 5-year post office FD is withdrawn after 6 months but before one year from the date of deposit, then the post office savings account interest will be payable for the completed months.

The scheme has a lock-in period of five years. During this period, it does not allow the withdrawal of money. Therefore, no premature withdrawal facility is offered during the five-year lock-in period.

What are the rules for premature closure of a Post Office RD? Premature closure can be done three years after opening, but if closed earlier, the interest rate reverts to the post office savings account rate. Closure is not allowed if there are advance deposits.

Hence, if a two-year, three-year or five-year post office FD is prematurely withdrawn before it completes maturity then 2% from the applicable interest rate is deducted. The applicable interest rate will either be one-year, two-year or three years calculated on the basis of completed years.

If premature withdrawal of 2/3/5 year TD account is done after 1 year from date of account opening, the applicable interest rate is 2% lower than the TD interest rate (that is, 1/2/3 years) for completed years and for part period less than a year, Post Office savings interest rate will be applicable.

Unlike other investment avenues like Mutual Funds, Equity, Gold etc it is not possible to operate your Post Office Savings Schemes account online i.e. you cannot track your account or invest online. You always need to keep your passbook updated all the time by standing in post office queues for hours.

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.

What is the rule for FD in post office? ›

You can invest in POFD for a tenure of 1 year, 2 years, 3 years or 5 years. You can extend the TD upon maturity for another tenure for which you had deposited. You can extend the maturity of your TD within the following prescribed period: 1 year TD - within 6 months of maturity.

A minimum of twelve monthly deposits are made into the Recurring Deposit account for a withdrawal before the maturity. Usually, only one withdrawal is allowed if all the conditions are satisfied. However, the amount of withdrawal amount should not be more than 50% of all the deposits until the said date.

Unlike the recurring deposit at banks, post office RD tenure is fixed, i.e. 5 years.

Suppose a person availed of 2 years FD of Rs 1 lakh at a rate of 6% for 2 years. He opted for withdrawal after completing the 1 year. Here the effective interest rate is lower than the booked interest rate. Therefore, banks will impose the penalty on effective FD rates, i.e., 6%-1%=5%.

The bank will at times allow premature withdrawal of a term deposit before its completion and will levy a penalty. The bank will pay the rate for the term deposit remained, after it has deducted 1%. 1% will be levied for preclosure including deposits that are closed for reinvestment.

Interest payable for premature closure of Resident/NRE Term Deposit / FSF will be the deposit rate applicable as on the date of opening of the deposit for such period that the deposit has remained with the Bank. For NRE deposits no interest will be paid if closed before completion of 1 year.

The Reserve Bank of India (RBI) on October 26, 2023, has increased the minimum amount for offering non-callable term deposits to Rs 1 crore from the existing Rs 15 lakh for banks. So, all customers will get an option to prematurely withdraw money from fixed deposits (FDs) of up to Rs 1 crore.