Are you planning to break your Fixed Deposits? Here is what you need to know

Financial security means having enough money to cover your monthly bills and other expenses. It ensures your loved ones are taken care of regardless of anything. You can achieve unwavering financial security by making suitable investments. It encourages you to save and potentially create wealth in the future. There are numerous optionsfor your perusal. You should consider your investment profile to make a suitable investment.

Fixed Deposits havebeen a popular choice. You can make a significant one-time investment and earn decent interest throughout the tenure. You can invest in an FD with any leading bank. Typically, you should invest with a bank offering the highest interest rate. Generally, you would invest according to a long-term financial plan. However, things may not always go as planned.

If a financial requirement arises, you may need to break your FD. However, do not do so. You can opt for the following instead:

Adopt the laddering method

Laddering is a popular FD strategy. Adopting the laddering strategy allows you to make multiple FD investments of varying tenures. You can categorise your FD Investments as short-, mid-, and long-term. If a sudden financial requirementarises, you can meet it with your short- and mid-term FD Investments. This way, your long-term investments stay intact, allowing you to meet your financial goals systematically.

Utilise your interest earnings

As mentioned, you earn a competitive fd interest rates. You can receive your interest earnings in two ways: non-cumulative and cumulative. You receive your interest earnings periodically with the non-cumulative option. Your interest earnings get clubbed with the principal sum with the cumulative option. If you foresee a financial requirement, consider opting for the non-cumulative option.

You can fulfil your financial needs by utilising your interest earnings. Typically, banks credit your interest earnings to your linked Bank Account every quarter or as the bank decides. This ensures your interest earnings are secure and instantly accessible. Use the Banking App to understand the bank’s interest payment structure and timeline.

Apply for a Loan against FD

Breaking an FD has several disadvantages. Firstly, you need to bear a heavy penalty. Every bank charge a different penalty for premature FD withdrawal. Reach out to your bank to find out the exact penalty charges. Secondly, you maylose significant interest earnings that can disturb your long-term financial plans. Applying for Loans against your Fixed Deposit Account is a viable option.

You can keep your investment intact and meet your requirementshassle-free. You can also get up to 90% of your FD value as a Loan amount with any leading bank. Another plus point is it is a Secured Loan. This means you canget a Loan at a reasonable interest rate, making repayment affordable.