Axis Bank FD Premature Withdrawal

What is Axis Bank FD Premature Withdrawal?

Axis Bank FD premature withdrawal means closing your fixed deposit before maturity. The bank allows this in urgent situations like medical emergencies or business needs, but certain conditions apply. For long-term FDs of two years or more, no penalty is charged if withdrawn after 15 months. When you withdraw early, the Axis Bank FD rates are recalculated based on how long the money was kept in the account. 

How to Close Axis Bank FD Prematurely?

Depending on your convenience, you can request Axis Bank FD premature withdrawal online or offline.

1. Online Method

   You can request a premature withdrawal of your Fixed Deposit using Internet Banking or the Axis Mobile App.

   Internet Banking

   • Log In: Visit the Axis Bank NetBanking portal and log in with your credentials.
   • Go to Deposits: Navigate to Axis Bank savings account > Deposits from the main menu.
   • Select Your FD: Choose the Fixed Deposit you want to withdraw prematurely.
   • Request Premature Withdrawal: Click on Premature Withdrawal or Close Fixed Deposit.
   • Choose Credit Account: Select the savings account where the withdrawn amount should be credited.
   • Authenticate & Submit: Enter your NetSecure Code and click Submit to complete the request.

   Axis Bank Mobile Banking

   • Log In: Open the Axis Mobile App and log in using your MPIN.
   • Go to the FD Section: Tap the FD option from the home screen.
   • Select Your FD: Choose the FD you want to withdraw prematurely.
   • Request Premature Withdrawal: Tap on Close Fixed Deposit to proceed.
   • Authenticate & Submit:  Enter your MPIN to confirm and submit the request.

2. Offline Method

   You can close your FD at a branch if you prefer in-person assistance or cannot access digital options.

   • Visit the Branch: Go to your nearest Axis Bank branch during working hours.
   • Carry Required Documents: Bring your FD receipt, valid ID proof, and account passbook or chequebook.
   • Fill Out the Form: Ask for and complete the premature FD withdrawal form.
   • Submit for Processing: Submit the filled form and documents to the bank representative.
   • Receive Funds: The amount will be credited to your savings account on the same or the next working day after verification.

Disadvantages of Axis Bank FD Premature Withdrawal

The following are key drawbacks to keep in mind before opting for Axis Bank FD premature withdrawal:

• Reduced Interest Earnings: Axis Bank FD premature withdrawal lowers your overall return, as the FD is closed before the full term. You lose out on the higher interest rates and the long-term benefits of compounding that come with staying invested till maturity.
• Additional Charges: Axis Bank FD premature withdrawal may come with penalty charges that reduce your final payout. The penalty (typically 1%) applies to most Axis Bank FD types and varies based on the deposit’s tenure and amount.
• Impact on Financial Planning: Fixed deposits often support long-term financial goals. Axis Bank FD premature withdrawal can affect your investment strategy, reduce planned savings, and delay milestones like buying a home or funding education.
• Processing Time and Impact on Loan: Axis Bank usually processes premature withdrawals within one working day. However, if the FD is linked to a loan or overdraft facility, early closure may affect your eligibility or loan terms. Always confirm with the bank before proceeding.
• Restriction on Credit Card Against FD: If your FD is pledged as security for an Axis Bank credit card against FD, it cannot be withdrawn prematurely until all outstanding dues are cleared. The bank may ask for a No Objection Certificate (NOC) confirming full repayment. Until then, the FD remains locked as collateral.

Tax Implications on Axis Bank FD Premature Withdrawal

If you withdraw your Axis Bank Fixed Deposit before maturity, the interest is recalculated at a lower rate based on the actual period the money was kept in the FD. This interest is fully taxable and counted under “Income from Other Sources” as per your income tax slab. As per Section 194A of the Income Tax Act, the bank deducts Tax Deducted at Source at 10% if the total interest earned in a financial year is more than ₹50,000 (₹1,00,000 for senior citizens). This may affect your final tax amount, so make sure to report the revised interest correctly when filing your Income Tax Return (ITR).

How to Avoid Axis Bank FD Premature Withdrawal?

Here are some smart ways to avoid Axis Bank FD premature withdrawal:

1. Plan Your Tenure Wisely: 

   Use the Axis Bank FD Rates Calculator to choose a tenure that matches your financial goals. This helps you estimate returns accurately and avoid premature withdrawal, ensuring you don’t lose interest benefits by closing the FD before maturity.

2. Create Multiple FDs with Axis Bank: 

   Split your investment into multiple FDs with different maturity dates. If you need funds, you can withdraw just one FD and leave the others untouched.

3. Keep an Emergency Fund: 

   Always maintain a separate emergency fund in a savings account or liquid mutual fund. This will reduce the need to dip into your fixed deposit.

4. Use Sweep-out or Flexi Deposit Options: 

   Axis Bank offers auto sweep-out FDs that link your savings account with a fixed deposit. If your account runs low, funds are automatically pulled from the FD, without penalty.

5. Credit Card Against FD: 

   Instead of breaking your FD, apply for an Axis Bank credit card against FD. It gives you access to funds while keeping your FD intact, helping you avoid penalties and earn interest.

Key Takeaways

Axis Bank FD premature withdrawal allows early access to funds when needed, but it can reduce your earnings. The FD interest rate is revised based on the actual deposit period, and a 1% penalty charge is applied, which lowers the final amount received. To avoid this, plan your FD tenure wisely, maintain an emergency fund, or consider options like sweep-out deposits or overdraft facilities against your FD. These solutions help you manage short-term needs while keeping your fixed deposit intact and continuing to earn full interest without additional charges.