Auto-renewal of fixed deposits ensures that when your FD matures, the principal (and sometimes interest) is automatically reinvested for the same tenure at the prevailing interest rate. This feature prevents the funds from lying idle in your savings account and helps investors continue earning returns.
| Method | Description |
|---|---|
| Principal only renewal | On maturity, only the principal is reinvested for a fresh term; interest is paid to your account |
| Principal + interest renewal | Both principal and accumulated interest are reinvested; results in compounding |
| Non-auto renewal | Deposit is credited to your account; you must instruct the bank if you want to reinvest |
Withdrawals and modifications
- You can opt out of auto-renewal at any time before maturity.
- Premature withdrawal after renewal is permitted but attracts a penalty.
- Some banks allow you to change the tenure or interest payout option at renewal.
Auto-renewal is convenient for investors who prefer long-term compounding without active intervention. Ensure that the bank notifies you of the new interest rate, and review your investment goals periodically.
