You can now find a solution in the product without having to disassemble. Framework decisions you can take a loan on the insured amount and give the overdraft facility, you can withdraw more than your deposit. "Rather than breaking an FD interest, it is best to take a loan against the FD," said Suresh Sadagopan, a financial planner based in Mumbai.

Why does it work for you?:
Advantage of personal loans: while the personal loan can cost about 20% a year, loans to recover than the FD rate is slightly higher than it earns the deposit.

Advantage over wind FD: Even at a price of 02.01%, it makes more sense to liquidate the assets. To liquidate a FD, most lenders will charge a penalty for early withdrawal. Usually the punishment for breaking an FD is 0.5-1% and is applicable for the period deposit has remained with the bank.

Suppose you have Rs 1 lakh FD for two years, gaining 9.3% a year and decides to break after six months. If the rate of 180 days FD is 7.0%, and an early exit penalty of 0.5%, 7.0% for the interest rate less 0.5% or 6.5%, is a deposit. So, at the end of six months, your interest will be 6.5% of RS 3229.

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If you had stayed invested for two years, the Rs 1 lakh would have increased by R1.2 lakh at the end of tenor. But if you had taken a loan of 90,000 rupees at the end of six months to 10.5% and paid the capital at the end of 1.5 years, which would have paid around 15,280 rupees as interest on the loan and net interest income (income Total minus the cost of interest on loans) at the end of two years would be R 5555. So there is a benefit, while the principal remains intact.

Watch out for:
Right to lien: Most banks will not let you close the deposit when you are availing the loan. Moreover, some banks specify that they can use any other deposit that you may have in the bank to settle loan dues in case of a default.

Source: [HT]