In India, the interest on fixed Deposit have increased like anything and now it's more than 7.5% in some banks which is more than home loan interest 1 year back. Now the question is people who are keeping their moneybin Fixed Deposit for whatever reason, what should they do.
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Like if you have started the Foxed Deposit 1 year back the maximum you would have got is 5% interest whereas today you are getting anywhere between 7% to 7.5%. So is it a wise idea to break the old FD and start a new one. The problem with breaking F is that, you lose some money for the premature closure like 1% interest amount will be deducted.
Now there is two option you can do. Full closure and create a new FD with current interest rate because anyway you will be getting 2% more interest. Other thing is that of your bank allows partial withdrawal, do withdraw 90% of the money which usually do not attract preclousre charges and using that create a new one. Now the 10% remaining can be matured in the dure time.
The second option is better than the first one but the problem is not every bank allows a partial withdrawal without attracting a penalty so you have to actually go to your bank and find out. The first option is what most people are doing now. Because they know that this interest rate is temporary and thus it can become lower, so they are creating the FD for long term.
Now this is also good for senior citizens who want yo get a regular income because in that way they know that they will be getting 7.5% interest and beating the inflation too. The thing is senior citizen do not have to pay any tax if they are earning only through the FD so in that way this is the safest and best option for them today.
