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