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Understanding Callable Fixed Deposits (FDs): Features and Benefits Explained

July 13, 2025

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When it comes to investing, individuals often seek safe and predictable options to grow their savings. Fixed Deposits (FDs) have long been a popular choice in the realm of financial investments, If you've been an FD investor.

you may have come across the term Callable Fixed Deposits. In this guide, we have explored the concept of callable FDs, shedding light on their features and benefits.

Understanding Callable FDs: Unveiling the Basics

Callable fixed deposits are Fixed Deposits that allow investors to withdraw partial or entire deposit amount before maturity. Such FDs don't come with a lock-in period. However, banks may charge a certain penalty fee for early withdrawal. The penalty fee can be up to 1% on interest. However, check with your bank for better clarity on the fees and charges levied on early withdrawals.

Benefits of Callable FDs: Why Consider Them?

1. Better Liquidity

If you're in need of urgent funds and your last resort in breaking your FD, in such situations callable FDs may help. Callable FDs allow premature withdrawals albeit at a certain cost in the form of penalty fee. This provides a safety net for depositors seeking quick access to funds during crunch situations.

2. Flexible Deposit and Tenure

Callable FDs offer flexibility in terms of tenure and deposit amount. You can choose the investment duration and amount as per your financial goals. The interest rate remains fixed throughout the deposit tenure allowing you to enjoy higher returns at the time of maturity.

3. Diversification of Investment Portfolio

Such FDs can help diversify your investment portfolio. Investors can spread liquidity options through callable FDs, which may help them get quick access to funds during financial emergency.

4. Low Investment Requirement

For most callable FDs, the investment amount starts from ₹1,000. This allows investors from different income strata to invest in such FDs and build a financially secure future. Kindly check with your bank regarding the minimum deposit amount for better clarity.

5. Higher Interest Rates

Callable FDs offer higher interest rates compared to Savings Accounts. Investors can significantly maximise their savings with Callable FDs. Though the option of early withdrawal is available, it's recommended not to break your FD so that you can enjoy maximum returns at the time of maturity.

6. Opportunity for Tactical Investment Moves

Callable FDs provide investors with an opportunity to make tactical investment moves based on market conditions and interest rate outlook. The early redemption possibility allows investors to capitalise on favourable trends or adjust their investment strategies accordingly.

7. Unaffected by Market Volatility

Similar to any other FD, callable FDs are not market-linked products. The interest offered remains fixed throughout the deposit tenure till maturity. However, for early withdrawals, the penalty fee may have an impact on your expected interest income.

Final Thoughts

Callable fixed deposits provide an investment opportunity that offers flexibility and potential advantages for investors. Individuals can make informed investment decisions that align with their financial goals and risk preferences by understanding the features, benefits, and risks associated with callable FDs.

If you're considering investing in callable FDs, it is essential to evaluate your risk tolerance and assess the potential impact of early redemption on your investment goals. Take the next step towards diversifying your investment portfolio by exploring Fixed Deposits offered by Ujjivan SFB

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FAQs

1) Are callable FD rates fixed or variable?

Callable FD rates are fixed throughout the deposit tenure

2) Is there a minimum investment amount required for callable FDs?

The minimum investment amount for callable FDs vary across banks and may depend on the FD scheme. You can open a Digital Fixed Deposit online with Ujjivan SFB with just ₹1,000.

3) Can depositors benefit from higher returns with callable FDs?

Interest on Fixed Deposits of more than 6 months is calculated based on compound interest method, which offers investors earning interest on interest. This benefits users in long-term wealth creation.

Understanding Callable Fixed Deposits (FDs): Features and Benefits Explained

Understanding Callable FDs: Unveiling the Basics