Penalty Structure Across Banks
| Bank | Penalty | Minimum Tenure |
|---|---|---|
| SBI | 0.5% rate reduction | 3 months |
| HDFC | 1% rate reduction | 6 months |
| ICICI | 0.75% penalty | 3 months |
When to Break an FD?
Consider breaking only if:
- You need emergency funds
- Interest rates have risen significantly
- Health emergencies
Example Penalty Calculation
₹5L FD broken after 2 years (original tenure 5 years @7%):
- Interest earned: ₹5L × 7% × 2 = ₹70,000
- Penalty: ₹5L × 0.5% = ₹2,500
- Net Interest: ₹67,500
Alternatives to Premature Withdrawal
- Take a loan against FD (up to 90% of value)
- Use sweep-in FDs for partial liquidity
- Create a flexi FD with savings account link