Overdraft Against FD

It is easier to avail an instant loan against the value of the fixed deposit without breaking the FD, hence, the name “overdraft (OD) against FD”. Avail the benefits of a fixed deposit account when you need emergency funds. The benefits such as a lower interest rate of up to 4% on your current FD rate, flexible repayment tenures and high loan amount of up to 90% of your FD amount. Further to access funds easily, you can meet the financial needs by liquidating the funds. Use the online overdraft against FD calculator to make sound financial decisions.

Overdraft Amount 75% - 90% of FD amount
Interest Rate 1% - 4% of prevailing FD rate
Tenure 6 months to 5 years or linked to FD tenure.
Note:*Note- The interest rates are subject to market rates and may change. Please check the official websites for the latest information.

What is An Overdraft Against FD?

An overdraft against fixed deposit is a financial arrangement where a bank or NBFC allows you to borrow money against your FD account in case of an emergency requirement without having to disturb or break an FD. With an OD against FD, you can borrow funds up to a certain limit, usually a percentage of up to 90% of the FD amount. The FD will serve as collateral for the overdraft facility without the need to close the FD at any given point before its maturity. The interest rate charged on the overdraft amount is typically lower than that of unsecured loans, making it a cost-effective borrowing option for individuals who have FDs but need immediate funds.

Are You Looking For a Personal Loan?

Overdraft Against FD Interest Rate

The interest rates for overdraft against fixed deposits vary depending on several factors, including the bank and NBFCs terms and policies, the amount of overdraft, and the tenure of the facility. The interest rates for OD against FDs are lower compared to other types of loans because the FD acts as collateral, reducing the risk for the lender.

Understanding Overdraft Against FD

When you require emergency funds but you want to retain your FD account, you can opt for an overdraft against FD. The bank or financial institution with whom you have an active FD account will allow you to borrow a certain percentage of about 75% - 90% of your FD’s value, giving you a line of credit with a limit that you can access anytime when needed. Here is how an OD against FD works:

Overall, OD against FD provides a convenient and cost-effective way to access funds quickly without having to break your fixed deposit. It's particularly useful for individuals who need short-term liquidity while keeping their FD intact for future financial goals.

Don't know your credit score? You can find out for free!

Check Your Credit Score for Free

Also get a Free Credit Report

Types of Overdraft Against FD

Banks and financial institutions offer two types of overdraft against FD, these are:

Secured Overdraft
Unsecured Overdraft

The interest rates for the overdraft are generally a little higher than the FD interest rate, usually ranging from 1% to 3%. For example, if the FD interest rate is 6%, the overdraft interest rate might be set at 2% above this rate, resulting in an effective interest rate of 8%.

So also, the interest rate is charged only on the amount that is withdrawn. For example, if you have an overdraft limit of ₹50,000 but you only withdraw ₹25,000, then the interest will be charged only against the ₹25,000 that has been withdrawn.

Do check with your bank or financial institution to get the current interest rates, as they may vary based on market conditions and individual terms and conditions. Also, explore all available options before you avail of an overdraft against your FD.

Overdraft Against FD Eligibility Criteria

The eligibility criteria to get an overdraft against FD are as follows:

Do you need an instant loan?

Features & Benefits of OD Against FD

There are several features and benefits of taking an overdraft against FD, these are:

Is Overdraft on FD Better Than Loan Against FD

Choosing between an overdraft against fixed deposit and a loan against FDs depend on your individual financial needs and preferences. While both options use the value of FDs, to offer financial aid instead of closing the FD, they differ in terms of flexibility and interest payments.

An OD against FD offers greater flexibility as it allows you to withdraw funds as needed, up to a limit set by the bank or NBFC, while only paying interest on the amount that you withdraw. This flexibility makes it convenient for you to access your cash whenever you’re in need. On the other hand, a loan against FD provides a lump sum amount upfront, with fixed monthly repayments and interest calculated on the entire loan amount.

Ultimately, whether an OD against FD is better than a loan against FD will depend on your financial requirements, repayment capabilities, and preferences.

Check more on fixed deposits from the links provided in the table below:

Apply For a Personal Loan with Best Rates!

Frequently Asked Questions

As of June 2024, some small finance banks and NBFCs offer the highest FD interest rates in India, which can go up to 8.5%. However, these rates may come with specific deposit amount requirements or shorter tenures.

Taking an overdraft against FD will be better than closing an FD account. So, taking an OD against FD is good depending on your circumstances.

The disadvantages of an overdraft are potential for overdraft fees, dependency on credit, and the risk of accumulating debt.

Yes, loan against FD is profitable as it allows access to funds while keeping the FD intact, earning interest.

The disadvantages of loans against FDs are lower interest earned on FD, risk of default affecting FD, and potential charges for premature withdrawal.

People take loans against FD for immediate liquidity needs, avoiding FD premature closure penalties, and accessing funds without affecting savings goals.

Closing your OD account will differ from different banks and financial institutions, you can contact your bank or financial institution and follow their specific procedures for account closure.

You can pay your overdraft amount through various ways, including online banking, mobile banking apps, automatic transfers, or in-person payments.

Display of trademarks, trade names, logos, and other subject matters of Intellectual Property displayed on this website belongs to their respective intellectual property owners & is not owned by Bvalue Services Pvt. Ltd. Display of such Intellectual Property and related product information does not imply Bvalue Services Pvt. Ltd company’s partnership with the owner of the Intellectual Property or proprietor of such products.

Please read the Terms & Conditions carefully as deemed & proceed at your own discretion.