A fixed deposit is a risk-free investment instrument since it does not expose your returns to market risks. Therefore, monitoring current market trends and assessment of market fluctuations is also not required when you invest in an FD. However, you need to have prior knowledge about the maturity date so that you renew or withdraw your FD at the right time.
The bank will contact you if you miss the maturity date. However, by chance, if they fail to reach out to you, you might have to give up your choice of deciding whether to renew or withdraw the FD.
Following things might happen when you forget to renew or withdraw an FD:
FD renewal is an option exercised by most of the banks when the FD remains unclaimed even after the date of maturity. The time-span required to take such a decision depends entirely on the bank you have invested.
A reputed bank might contact you a couple of times before renewing your FD. However, if a fixed deposit remains unclaimed for two or three successive tenors, then the bank might keep renewing it until you claim your returns.
If you have invested in a company fixed deposit like the Bajaj Finance Fixed Deposit, chances of unclaimed deposits get minimized. The company will remind you three months before the date of maturity. Once the maturity date approaches near, an agent from the company will call and inform you the exact date and will also ask whether you wish to renew or withdraw the FD.
Most of the banks allow the investors to choose whether they want to renew the FD after maturity or wish to withdraw it in a specific savings account. They provide a separate column in the application form where they can specify it while opening the FD account. However, if none of the options is chosen and the investor does not inform the bank what to do with his returns, then the FD interest rates might be revised by the bank.
Bajaj Finance allows the investors to withdraw their interest earnings along with the principal amount directly to their savings account. Or else, they can withdraw only the interest earnings and re-invest the principal amount. The choice entirely depends on the investor, and this also ensures that there is no case of an unclaimed FD.
Should I renew my FD?
Most of the investors are aware of the maturity date of their FDs but are not able to decide whether or not to re-invest their fixed deposit income. The decision you make must be based on the following factors:
FD interest rates
The FD interest rates might be different at the time of maturity. Therefore, you can see whether your existing financier is offering higher interest rates by comparing it the interest rates of other FD providers.
Bajaj Finance is providing interest rates up to 7.85 percent on FDs. Senior citizens are provided with FD interest rates up to 9.10 percent. Also, you can know the exact returns of your FD with the help of the Online Fixed Deposit calculator.
You must also monitor some of the market trends like inflation before withdrawing or re-investing your FD income.
It is better to renew the FD instead of withdrawing if the inflation is high as it will enable you to earn better returns in the future.
Understand your financial priorities
It might be the right time to invest in money market instruments that provide higher returns if your retirement is nowhere around the corner. However, if you are moving closer to the age of retirement, then it is better to stick to low-risk investments like fixed deposits. Therefore, you can re-invest your fixed deposit income in such cases.
These were some of the factors which will help you to decide whether or not to re-invest your FD returns. Company deposits like Bajaj Finance Fixed Deposits enable you to choose the FD tenor as per your convenience. Your investments are safe with Bajaj Finance FDs as these deposits are rated for safety by credit rating organizations like ICRA & CRISIL Rating Agency. Moreover, you can withdraw your FD anytime by paying a small penalty fee or you can also avail a loan against FD.