Deep, deep dive
- Before you invest, check that your FD is insured by PIDM
- Check terms and conditions before agreeing to promotional rates
- Split your FD savings into a few smaller accounts
- Make sure you know the penalty of withdrawing funds before the end of the term (prematurely)
- Understand requirements to partially withdraw funds from your FD
Make sure you know the penalty of withdrawing funds before the end of the term (prematurely)
Like a few other things, this also varies from bank to bank. However, for nearly all banks, you’ll lose all the interest you’ve earned for any withdrawals made within 3 months.
For premature withdrawals after 3 months, it is common to lose up to 50% of the interest.
There are two types of penalties:
1) That only applies to the amount you withdraw
2) Applies to the total amount.
You should ask your bank which penalty applies. In general, it is ALWAYS better to have the penalty apply only on the withdrawn amount.
Some banks may even require you to provide an additional written notice period for premature withdrawal in order to avoid losing all your interest earnings.