Fixed Deposit Renewal – Maximizing Returns on Your Investment

Fixed Deposits (FDs) have long been a favoured investment option for individuals looking to secure their savings while earning attractive interest rates. However, once the maturity period of an FD is reached, investors face a crucial decision – whether to renew their FD or withdraw the funds. In this blog, we will delve into the concept of fixed deposit renewal, focusing on auto-renewal, the renewal process, and its important terms.

What is Auto-Renewal of Fixed Deposit?

Auto-renewal is a convenient feature offered by most financial institutions, where the fixed deposit is automatically renewed for the same tenure upon maturity unless specified otherwise by the account holder. Instead of withdrawing the principal amount, the FD is re-invested for another term, and the interest earned is compounded over time.

How to Renew Your Fixed Deposit?

Renewing your fixed deposit is a simple process that can be initiated through various channels. Here’s a step-by-step guide to help you through the renewal process:

Step 1: Assess Your Financial Goals

Before proceeding with the renewal, assess your financial goals and needs. Consider whether you require immediate access to the funds or if you can afford to reinvest them for a longer duration.

Step 2: Contact Your Bank or Financial Institution

Contact your bank or financial institution before the FD maturity date. You can do this through online banking, a visit to the branch, or a phone call to their customer service.

Step 3: Specify Your Renewal Option

Inform the bank about your renewal decision, whether you want to opt for auto-renewal or manual renewal.

Step 4: Provide Necessary Documents

If you choose manual renewal, provide the necessary documents as requested by the bank to complete the renewal process.

Step 5: Verify Renewal Terms

Verify the renewal terms, such as the new interest rate and tenure, before finalising the renewal.

Ways to Renew Your Fixed Deposit

1. Auto Renewal

Auto-renewal is an attractive option for those who prefer a hassle-free experience. Once you opt for auto-renewal, you don’t need to keep track of the maturity date or visit the bank to renew the FD manually. The funds will be automatically re-invested, and you will continue earning interest without interruption.

2. Renewal by Holder

In contrast to auto-renewal, some individuals prefer to exercise more control over their FD investments. With renewal by the holder, account holders need to notify the bank about their intention to renew the FD or withdraw the funds before the maturity date. This option allows for greater flexibility in managing one’s finances.

What happens if the FD is not Renewed?

If an FD is not renewed or withdrawn upon maturity, it typically enters a grace period for the account holder to decide. The bank may offer a slightly higher interest rate during this period to encourage renewal. However, if no action is taken during the grace period, the FD may be converted into a regular savings account with significantly lower interest rates.

Important Terms on FD Renewal

To fully understand the process of fixed deposit renewal, it is essential to familiarise yourself with the following terms:

1. Maturity Date

The date on which the FD reaches its full term and becomes eligible for renewal or withdrawal.

2. Grace Period

The period after the maturity date during which the account holder can renew the FD without losing out on the interest earned.

3. Nominee

The individual appointed by the account holder to receive the funds in case of the account holder’s demise.

4. Penalties for Premature Withdrawal

The bank imposes the charges if the account holder withdraws the FD prematurely before maturity.

5. Renewal Interest Rate

The interest rate applies to the renewed FD may vary from the original rate.


Fixed deposit renewal is an important decision that impacts your savings and financial stability. Whether you choose auto-renewal or renewal by the holder, carefully evaluate your options based on your financial goals and requirements. The convenience of auto-renewal and the flexibility of renewal by the holder each have their merits, so make an informed choice.


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