You have already earned interest at 7.5% for the first year, but if you withdraw early, the bank will recalculate the interest rate based on 7% minus 1%, which is 6% per year. When you initially invested, the interest rate for a one-year term was 7% per year.

However, after a year, you need to withdraw your money. Let's say you put ₹10 lakhs in a fixed deposit for three years at 7.5% per year. So, if you're considering breaking a FD, this comprehensive guide will equip you with all the information you need to make an informed decision. This guide aims to help you navigate the process of premature withdrawal of fixed deposits, including the rules and penalties, eligibility criteria, procedure for breaking a FD, and tax implications. Moreover, different banks have different eligibility criteria for the withdrawal of a FD before maturity. The penalty or charges for breaking a FD can range from a fraction of the interest earned to the complete loss of interest. In India, banks and financial institutions have different rules and regulations regarding the premature withdrawal of FDs. That's why it's crucial to have a clear understanding of the rules, procedures, and penalties associated with breaking a FD prematurely. Premature withdrawal of fixed deposits, popularly known as breaking an FD, can incur penalties, reduce the interest rate earned on the deposit, and sometimes even nullify the interest entirely.

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