Worried about breaking your bank FDs and having to pay the penalties associated with them?

Here are a few ways in which you can avoid paying penalties for premature withdrawals.

1) Maturity Ladder- While entering into an FD, make sure you buy FD's for different maturities. E.g. If you wish to buy an FD for 10 years, break it down into 1-2-3-5-7-10 year FD's. This way, you will have enough liquidity in case of an emergency withdrawal.

2) Taking loans against FD- The interest charged would be around 1-2 higher than the one you receive, however, if you are unable to pay your loan, you can directly break-in your FD, without paying for the penalty.

3) Flexi-deposit/Sweep-in facility- The tenure of this type of deposit is usually 1-5 years and provides higher interest rates than your savings account but a little lower than FD's. However, here, it creates a separate corpus which you can withdraw in case of an emergency.

Cheers!

#interestrates#bank#fixeddeposits#financialplanning#personalfinance

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