FD vs Loan: Should I break FD or take a loan on it, neither the bank nor any CA will tell me, know which one is more beneficial

Whenever there is a need for money, everyone wants to use their savings first. Some people even break their FD (Fixed Deposit), but is it right to do so? Why not take a small loan on the same FD. Most people believe that one should stay away from loans. Although this thinking is absolutely correct, but in many cases taking a loan can prove to be a profitable deal. If you are also thinking of breaking FD for money, then wait a bit. In most cases you can take a loan against FD, which will benefit you.

Suppose you have made an FD for 2 years, on which you are getting 7 percent interest. In such a situation, it is possible that the bank will be giving about 6.5 percent interest on 1 year FD. Now if you break FD when you need money, you will suffer a loss.

You will have to pay a penalty of about 1% for breaking FD before time. Some banks charge some fees in addition to this. Even if you ignore the fees, you will get only about 5.5% interest on breaking FD when needed. If you break FD very early, this interest will be even less.

If you take a loan on FD, it will be cheaper than a normal personal loan. If you are getting 7% interest on FD, then you will get a loan on it at 1.5-2% more interest. That is, you will get a loan on FD at 8.5-9% interest.

Now you will think that you will have to pay more interest in this way, but the good thing about this is that the savings you have made will be safe and will continue till maturity. That is, even though you will be burdened with a loan, you will still have savings. You will settle the loan today or tomorrow, but savings will be the support for your future.

Suppose you need 20-30% of the FD amount, then you should not break the FD at all. On the other hand, if it has been more than 6 months or a year since your FD, then do not look at it at all. If you need 80-90% of the FD amount and your FD is about to mature, then also try not to break the FD. In such a situation, arrange some money from somewhere else and you will get a loan of up to 80% on the FD.

If it has been only a few months since you made the FD, then you can break the FD instead of taking a loan. Do this also when you need a lot of money. If you need only 20-30% of the FD amount, then take a loan instead of breaking the FD. Think of breaking the FD only when you need at least 70% of the amount, that too when it has been started only a few months ago.

Whatever be the situation of the stock market, fixed interest is available on fixed deposits. This is the reason why most people focus on getting FD. But this is not the only specialty of FD, rather it has many such benefits, which you should know. Let us know 7 such benefits.

Changes in interest rates do not affect FD. Once you invest in FD at a particular interest rate, you will get it with guarantee. During this time, even if the interest rate is low, you will get the fixed interest. That is, whatever you thought while making FD or whatever amount you planned to invest in FD, you will get that money with guarantee after the fixed time.

There are many options of investment in FD. In this, you can get FD according to your amount and time. Usually, FD can be made for a period of 7 days to 10 years. SBI makes FDs of minimum Rs. 1000. There is no limit on the maximum amount of FD in SBI.

One of the specialties of FD is that you can take a loan against it. If you suddenly need money, you can take a loan against it without breaking the FD. Usually, up to 90 percent of the amount of FD is easily available as a loan. Usually, the interest on the loan against FD is one percent more than the interest.

After making FD, you have the opportunity to withdraw money even before maturity. However, some charge has to be paid for pre-mature withdrawal. It is different in different banks. Usually it can be up to one percent. Due to this specialty of FD, it is also called liquid investment. If there is a sudden emergency, you can immediately withdraw money from FD.

Fixed Deposit is considered to be the most risk-free investment option in the country. Banks are monitored by RBI. FD is a safer option than any other deposit option.

Investing in some FDs provides tax exemption under section 80C. This FD is for 5 years, which is called tax saving FD.

Senior citizens get higher interest than the normal rate. Usually it is about 0.5 percent more. In this way you can get more interest on your FD.