ICICI FD Premature Withdrawal Penalty Calculator

The bank offers an online FD premature withdrawal penalty calculator to help the consumers understand the penalty deduction, investment return, and others. ICICI FD premature withdrawal penalty calculator is accessible to any user through the official website of ICICI. The article will help consumers understand the overall aspects of premature withdrawal.  

Penalty for Premature Withdrawal 

• Fixed deposit schemes offered by the ICICI bank have a premature withdrawal facility. The facility allows the withdrawal of the total money invested in fixed deposits and interest earned before its complete maturity. It helps individuals meet their urgent life events and various financial emergencies. 

• The penalty for premature withdrawal varies as per the time of withdrawal. If the money is withdrawn within one year from the money invested, the penalty is charged as 0.50%. For the money invested for more than one year or five years, the penalty for premature withdrawal is charged at 1%. In case of INR 5 crore is invested for more than five years, the penalty for premature withdrawal is charged at 1.50%. 

• The penalty percentage is deducted from the applicable interest rate for the fixed deposit scheme. Therefore, if the consumers withdraw money before its maturity, they will earn considerably less interest rate than the market rate. They are required to forgo some money as a penalty. 

• If they withdraw the money close to the maturity period, the total penalty is comparatively low. Since the money would be invested for the long term, it will help them to leverage considerable benefits for the time money was successfully invested. 

Comparison Between

Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund

Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund

Guaranteed Return Plans

Returns Before Tax

7.5% ^(TAX-FREE)

Returns After Tax

7.5%

Guaranteed Returns

Yes

Life Cover

Yes

Tax on Profit

Tax Free*

Risk

No Risk

Still Better than FD’s and Debt Mutual Fund

Fixed Deposits

Returns Before Tax

7% ^(TAXABLE)

Returns After Tax

4.8%

Guaranteed Returns

Yes

Life Cover

No

Tax on Profit

Taxable

Risk

Low Risk

Debt Mutual Fund

Returns Before Tax

8% ^(TAXABLE)

Returns After Tax

5.5%

Guaranteed Returns

No

Life Cover

No

Tax on Profit

Taxable

Risk

High Risk

VIEW PLANS

*For annual premium upto ₹5 Lacs

Interest Payment on Premature Withdrawal 

• The premature withdrawal facility allows consumers to withdraw the fixed deposit scheme before it matures. They can withdraw the fixed deposit amount within one year or after one year. If they withdraw the money within one year, they must pay comparatively less penalty, i.e., 0.5%. If they withdraw the money after one year, they must pay a penalty of 1%. 

• The fixed deposit schemes are popular among consumers because it helps to earn a high-interest rate without reinvesting the money elsewhere. This facility encourages consumers to invest money in fixed deposits for a longer period, such as ten years. 

• However, if less interest is paid on a fixed deposit scheme, the consumers will not be motivated to invest in these schemes. It is a debt instrument that helps the banks to offer high returns once the product matures. However, withdrawing from the ICICI fixed deposit scheme before maturity would also incur a loss to the banks. Since the scheme will not generate the expected return for the time invested.

• Thus, the loss of income is balanced by the penalty charges. As a penalty, 0.5% or 1% interest rate is deducted from the proposed interest rate. Therefore, the ICICI fixed deposit scheme will generate a lesser return for the time the money is invested. 

• To deter the consumers from withdrawing money prematurely from the fixed deposit account, the banks encourage them to withdraw it as early as possible, i.e., within one year. It helps the banks to manage their assets more aptly. However, if the money is withdrawn close to the maturity period, the consumers will get a considerable return for the money invested for a long period. However, banks consider this not a profitable choice. 

ICICI Bank FD Premature Withdrawal Penalty Calculator

• Consumers find it difficult to assess the amount of money they would lose if they choose premature withdrawal. They find it difficult to trade off between the urgent financial needs and potential money lost due to premature withdrawal. To help the consumers in this case, ICICI bank has developed an online ICICI FD Premature Withdrawal Penalty calculator. The ICICI FD Premature Withdrawal Penalty Calculator shows the money lost yearly due to any premature withdrawal. 

• To access the Premature Withdrawal Penalty Calculator, the consumers must visit the website of ICICI and find the FD closure calculator under the calculator segment. The Premature Withdrawal Penalty Calculator calculates the amount of return that can be made available for normal customers and senior citizen customers.

• The users must provide the FD creation date, deposit amount, and penalty rate as applicable. The maturity date shows the date current date. Therefore, Premature Withdrawal Penalty Calculator helps to assume the fixed deposit value as per the current date. Consumers can choose different variables of the inputs mentioned above to assess the effectiveness of their decision for premature withdrawal.

• The output data is shown every year the interest will be earned. The users can choose to see the comparative output through table mode or graphical mode. The online calculator also includes the maturity details of the scheme in terms of rate of interest, maturity amount, interest amount, and tenure in the output section. Therefore, the ICICI FD Premature Withdrawal Penalty Calculator offers an overall assessment of the decision to withdraw the FD scheme prematurely.

Calculation of Premature Withdrawal Penalty 

As per the calculation shown in the calculator, an example of a premature withdrawal penalty has been put forth below.

Case one: The person invested INR 1,00,000 in ICICI fixed deposit scheme on 5th May 2013. The ICICI Fixed Deposit Scheme is about to mature on 5th May 2023. It was invested for ten years.

As per the ICICI FD premature withdrawal calculator, the maturity value of the scheme becomes INR 21,40,776. It offers an interest rate of 8.5%. Here, no penalty is added. Since the person does not want to withdraw the money prematurely, the total interest is paid to date INR 11,40,776.

However, if the person wants to withdraw the money prematurely, the person will pay a withdrawal penalty of 1%. So, the interest rate will be 7.5%. The person will earn total interest to date INR 9,59,015. Since the maturity value of the scheme will be INR 19, 59,015. 

Therefore, a small penalty of 1% can make a huge difference in the amount of interest earned if the fixed deposit amount is high. Therefore, it will not be justifiable to withdraw the scheme prematurely after investing it for a long time to allow it to mature. 

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