What to do when fixed deposit matures? What are my options?
It is one of the most common questions asked by Fixed Deposit investors, especially by the new ones.
To answer your question about what to do after FD maturity in detail and for your convenience, I present three suggestions:
- You can choose to fully withdraw the principal amount with accumulated interest. Suppose your FD is of ₹1,00,000 at 7% interest for a year, you will receive ₹1,07,000.
- If you choose the auto-renewal option while booking the Fixed Deposit, the bank reinvests your amount upon maturity.
- Also, you can reinvest either only the principal or the total matured value into a new FD account. You can also look for an FD with a higher interest and invest the entire matured amount for a higher return.
To help you with your concern, I suggest the following cautions:
- If you unknowingly book an FD with an auto-renewal option enabled, do not break it after its renewal. A penalty of 0.5% to 1% implies premature withdrawals.
- FD issuers send timely updates when the maturity date is near via email or SMS. Keep an eye on them so you can make an informed decision.
In case you are planning to reinvest your FD, calculate the returns using an FD calculator online.