Fixed Deposit Transfer: Process and Implications

Transferring a Fixed Deposit (FD) from one bank to another can be a strategic financial move. Whether you're seeking better interest rates, improved banking services, or more favourable terms, transferring your FD requires careful planning to ensure that you maximise benefits.

In this blog, we will provide you with a step-by-step guide on how to transfer your fixed deposit between banks. 

Understanding Your Current FD Terms 

Before initiating the transfer, it's crucial to review the terms and conditions of your current FD. Take note of the maturity date, interest rate, and any penalties for premature withdrawal. Some banks impose penalties that could reduce your interest earnings if you withdraw the FD before it matures. Let's consider an example: 

Example:

You have a fixed deposit of ₹5 lakhs with Bank A at an interest rate of 7% p.a. The maturity date is three years from now. If you decide to withdraw it prematurely after two years, Bank A charges a penalty of 1% on the interest earned.

In this scenario, if you transfer your FD to another bank with a higher interest rate or better terms, you need to calculate whether the potential benefits outweigh the penalty imposed by Bank A. 

Point to note: The above example is for illustration purpose only. For latest FD rates, kindly visit our interest rates section.  Ujjivan doesn't charge any premature withdrawal fee for withdrawals made after 6 months from the time of deposit.

Comparing New FD Options 

Researching and comparing FD offerings from various banks is essential when considering a transfer. Pay attention to factors such as tenure, minimum deposit amounts, and any special schemes offered by the new bank. Effective FD portability involves choosing a new FD that offers better returns or suits your financial goals more closely. Let's explore another example: 

Example:

Bank B offers an FD at an interest rate of 8% p.a. with a minimum deposit requirement of ₹1 lakh. The tenure options range from 1 to 5 years, providing flexibility based on your investment goals. 

By comparing the offerings of different banks, you can make an informed decision about the best FD option for your needs. 
 

Point to note: The above example is for illustration purpose only. For latest FD rates, kindly visit our interest rates section.  Ujjivan doesn't charge any premature withdrawal fee for withdrawals made after 6 months from the time of deposit.
 

Contacting Your Current Bank 
 

To transfer an FD from one bank to another, you must close the FD with the current bank and open a new FD with the new bank. 

Preparing Necessary Documentation 
 

To open a new FD with another bank, you have to start the account opening process afresh. Please have the necessary documents like PAN and Aadhaar at your disposal for quick and hassle-free account opening.

Open Your FD Account with the New Bank 
 

Submit the required documentation to your new bank for KYC. With Digital Fixed Deposits, you can complete your Video KYC from the comfort of your home. However, ensure your mobile number is linked to Aadhaar; it's a pre-requisite for Video KYC. The OTP will be sent to your registered mobile number.

How can I calculate the penalty for premature withdrawal of my FD?
 

The premature FD withdrawal penalty fee varies across banks. Usually, it's 1% of the interest rate pertaining to the tenure. For example, if you have booked an FD for 7 years at an interest rate of 7%. You decide to withdraw the amount on the 6th year. 

Let's say the applicable interest rate on the 6th year is 6%. The 1% penalty fee will be imposed on this 6% (prevailing rate pertaining to the tenure). So, you will get 5% interest on your FD at the time of withdrawal. Ujjivan doesn't charge any fee for withdrawals made after 6 months from the time of deposit.

Point to note: The above example is for illustration purpose only. For latest FD rates, kindly visit our interest rates section.  Ujjivan doesn't charge any premature withdrawal fee for withdrawals made after 6 months from the time of deposit.