How to withdraw rd amount after maturity?

Closing an RD refers to withdrawing the entire amount invested in the RD along with interest earned. Investors can close their RD online or by visiting their bank branch. In most cases, banks do not charge any penalty for premature withdrawal of RD after maturity.

A Recurring Deposit (RD) is a popular investment option for individuals looking to save money over a fixed period. It is a form of fixed deposit wherein individuals deposit a fixed sum of money each month for a fixed period.

The maturity of an RD refers to the end of the fixed deposit period. After the maturity of an RD, the investor has various options available to them. This article will explore what happens to an RD after maturity.

One of the most common options available to investors after the maturity of an RD is to renew the RD. Renewal of an RD allows an investor to continue investing in the same RD scheme with the same terms and conditions.

Investors can choose to renew their RD for the same duration or for a different duration, depending on their investment goals. Renewal of RD is a hassle-free process, and investors can choose to renew their RD online or by visiting their bank branch.

Another option available to investors after the maturity of an RD is to close the RD. Closing an RD refers to withdrawing the entire amount invested in the RD along with interest earned.

Investors can close their RD online or by visiting their bank branch. In most cases, banks do not charge any penalty for premature withdrawal of RD after maturity. However, checking with your bank regarding the penalty charges for premature withdrawal is important.

Some banks offer the option of extending the maturity period of an RD. Investors can choose to extend the maturity period of their RD for a fixed period by submitting a written request to their bank.

The interest rate offered on the extended RD may differ from that offered on the original RD. Investors can choose to extend their RD for the same or different duration depending on their investment goals.

Most banks offer the option of auto-renewal of RD. Auto-renewal of RD refers to the automatic renewal of the RD on the date of maturity for the same duration as the original RD. This option is convenient for investors who wish to continue investing in the same RD scheme without the hassle of renewing the RD manually.

However, investors must ensure that they have sufficient funds in their savings account on the date of maturity to facilitate the automatic renewal of RD.

Some banks offer the option of converting an RD into a fixed deposit (FD) after maturity. This option is beneficial for investors who wish to continue investing in a fixed deposit scheme instead of an RD scheme. The interest rate offered on the FD may differ from that offered on the RD.

Some banks offer the option of partial withdrawal of RD after maturity. Investors can choose to withdraw some of their investment while leaving the rest to continue earning interest. The interest rate offered on the remaining investment may differ from the original RD’s.

After the maturity of an RD, investors can choose to transfer the entire amount, including the interest earned, to their savings account. This option is suitable for investors who need immediate access to their funds or who want to use the money for other purposes.

However, it is important to note that the interest earned on an RD is usually higher than that earned on a savings account.

Another option available to investors after the maturity of an RD is to reinvest the interest earnings in the same RD or a different investment option. This option can help investors maximize their returns by earning interest on the interest earned during the RD’s tenure. Some banks also offer the option of reinvesting the interest earnings automatically.

Investors can also open a new RD with the maturity amount and interest earned. This option is suitable for investors who want to continue saving money over a fixed period and earn a guaranteed return on their investment. Investors can choose the duration and interest rate of the new RD based on their investment goals.

Investors can choose to donate the maturity amount of their RD to a charity or a non-profit organization. This option can help investors contribute to a good cause and positively impact society. Some banks also offer the option of donating a part of the maturity amount to a charity or non-profit organization.

Conclusion

After the maturity of an RD, investors have several options available to them, including transferring the maturity amount to a savings account, reinvesting the interest earnings, opening a new RD, donating the maturity amount, and investing in a different investment option.

It is important to consider the pros and cons of each option and choose the one that aligns with your investment goals and financial situation. Investors should also consult their financial advisor or bank representative to make an informed decision.

Vakilsearch is a company that provides legal and financial services to individuals and businesses. Vakilsearch offers an RD calculator, which enables investors to determine the returns on their RD investments. The calculator considers the investment amount, tenure, and interest rate, providing an estimated return on investment at the end of the investment period.

Fixed deposits are reliable financial instruments wherein you lock in your funds with an issuer for a specific period and interest rate. They are considered to be one of the most stable and secure options and can factor comfortably into almost any portfolio.

This is because fixed deposits assure you of returns irrespective of market fluctuations. Best of all, you may book a regular or tax-saving fixed deposit based on your investing goals, and enjoy this benefit all the same.

An important point to note here is that you have to withdraw your fixed deposit account or renew the same on maturity. Learning how to withdraw money from a fixed deposit after maturity is easy, as the process can be completed online or offline.

After you place a request to withdraw a fixed deposit - either via net banking or by visiting an issuer’s branch, you will be allowed to get the amount you had invested.

If you want to know how to withdraw a fixed deposit before maturity, you are allowed to do so after placing a request. However, you may be charged 0.5% to 1.00% of the interest rate as a penalty for premature withdrawal depending on the financial institution.

If you break the fixed deposit before 7 days of investing in it, the bank will not pay you any interest on that. To know more about these processes and their nuances, here’s a guide on how to withdraw money from a fixed deposit after maturity.

Fixed deposits offer the best convenience to the investor, as they can be opened and withdrawn without the need to visit the bank's branch office. If you wish to visit the bank for fixed deposit withdrawal after maturity, you can do so by submitting the required form and documents.

Another easier way is to undertake the fixed deposit withdrawal process online via Internet banking. Follow these simple steps to learn how to withdraw money from a fixed deposit after maturity online.

Fixed deposits are becoming one of the most popular investment options in India for investors across age groups. Not only are they secure and easy to understand, but most issuers offer attractive interest rates, making them a viable choice for wealth generation.

Investing in a fixed deposit is a sure-shot way to keep your capital safe. It can also be liquidated with ease during financial emergencies. While you may not find it difficult to open a fixed deposit, you may be thinking how to withdraw money from a fixed deposit after maturity?

Here is a detailed process on fixed deposit withdrawal after maturity. One way of FD withdrawal is to visit the branch office of your bank in which you have a fixed deposit account.

Submit the deposit certificate to confirm that you wish to withdraw the fixed deposit on maturity. Additionally, you will also be asked to fill out an application for fixed deposit withdrawal after maturity and sign it. This confirms that the fixed deposit should be withdrawn after maturity.

After completing this process, the fixed deposit amount – principal amount + accumulated interest – will be transferred to your savings account. Ensure that you fill in the right savings account details in your FD withdrawal application.

In case you fail to give any instructions to your issuer on what needs to be done after your FD matures, the issuer will then take action on your behalf in one of the following ways:

In this case, the bank will automatically renew the fixed deposit for a year or for the same tenor as the original FD with the same terms and conditions.

Here, the fixed deposit will get liquidated on the due date and the bank will transfer the proceeds, i.e. the principal amount + the accumulated interest to your savings account.

While these actions may be acceptable, you should know how to withdraw money from the fixed deposit after maturity. In some cases, there may be special provisions or terms listed by the issuer. These may be listed on the deposit certificate or any other documents provided to you.

A premature withdrawal facility in a fixed deposit allows you to withdraw the deposit before maturity. This comes as a great relief as you may need funds for a financial emergency or to deal with a cash crunch. However, in such cases, banks may ask you to pay a penalty to them as part of the process.

The penalty charges usually range between 0.5% and 1%, but it will vary from one issuer to the other. Another point is that a bank or a company is not liable to pay interest on fixed deposits that are prematurely withdrawn before 7 days from the date of booking the FD.

To help you understand this better, consider the following example.

Example 1:

Consider a customer has invested in an FD of ₹1 Lakh at a rate of 7% for 2 years. Let us also assume that the interest rate for 1 year is 6.5%. The investor withdraws the FD after completing 1 year.

In one year, he has earned interest @ 7%. But now, the issue shall recalculate the interest at revised FD rates, i.e. 6.5% – 1% (penalty charges) = 5.5%. The new rate will be 5.5%, and interest shall be paid at this rate, instead of 7%.

Example 2:

Consider an investment in an FD of ₹1 Lakh at a rate of 6% for 2 years. Assume that the interest rate for 1 year at the time of booking is 7%, and the penalty rate for premature withdrawal is 1% of the effective rate of interest.

The effective rate of interest is lower than the rate at which the amount was booked and the rate for the tenure that the FD has remained in the bank.

He withdraws from the FD after completing 1 year. In one year, he has earned interest @ 6%. But now, the issue recalculates the interest at an effective FD rate, i.e. 6% – 1%= 5%. The new rate will be 5%, and interest shall be paid at this rate instead of the previous 6%.

With all the information given above, it is understood fixed deposits are viable options for investors who need assured safety and guaranteed returns at flexible intervals of time throughout the investment timeline. Best of all, learning how to withdraw a Fixed Deposit after maturity is easy, and most issuers have digital provisions.