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Understanding The Consequences of Not Renewing or Withdrawing Your Fixed Deposits


by Mahindra Finance


April 25, 2024


5 mins read


Fixed deposits are an excellent investment option that offers security and guaranteed returns. They are an ideal choice when you want to avoid market risks. However, it’s important to be aware of the maturity date and take necessary actions to ensure your money continues to work for you. In this blog post, we will explore what happens to FD after maturity or if you don't renew your fixed deposits after maturity.

1. The Process Followed by Banks:

If someone does not withdraw a fixed deposit after maturity, banks have two options. They can either pay the current savings account rate or auto-renew the fixed deposit account at the same interest rate. The decision depends on the bank's policies. If the bank cannot contact you or the nominee, they will continue to auto-renew the fixed deposit. It's crucial to check FD interest rates in India before making any decisions regarding your FDs. 

Now that we know what happens to FD after maturity in banks let's see other scenarios.

2. Unclaimed Company Fixed Deposits:

Investing in a reliable company's fixed deposit provides additional safeguards compared to a bank fixed deposit account. These companies typically remind investors about the maturity date well in advance and provide options for renewal or withdrawal. If a company fixed deposit remains unclaimed, the maturity amount is transferred directly into the investor's bank account through NEFT or RTGS. In case of a bounced transfer, a cheque is issued to ensure you receive your funds.

3. Implications of Not Renewing or Withdrawing FDs:

If you forget to renew or withdraw your FD after maturity, there are several consequences you should be aware of:

  • Loss of Interest: By not taking any action, you miss out on earning additional interest on your investment. This can significantly impact the overall returns.
  • FD Auto-Renewal at Lower Rates: If your FD is set to auto-renew, the bank or company will renew it at the prevailing interest rate, which may be lower than what you initially earned. This can lead to a decrease in your future earnings.
  • Decline in Real Value: Inflation erodes the purchasing power of money over time. By not renewing or withdrawing your FD, the real value of your investment decreases as its purchasing power diminishes.

4. Sample calculations:

Let's understand the financial impact of not renewing or withdrawing an FD through a few sample calculations:

  • Scenario 1: Suppose you have a fixed deposit of ₹1 lakh with an interest rate of 7% per annum. If you don't renew it for another term, you will lose out on ₹7,000 in earned interest per year.
  • Scenario 2: Consider a fixed deposit of ₹5 lakhs that matures and gets auto-renewed at a reduced interest rate of 6%. Over five years, this leads to a loss of approximately ₹1.25 lakhs compared to if you had withdrawn and reinvested it at a higher rate.

You can make use of an FD return calculator for accurate information.

5. Benefits of renewing FDs:

Renewing FDs offers several advantages:

  • Continuity of Returns: By renewing your FD, you ensure that your money continues to earn interest and work for you.
  • Higher Returns: Opting for renewal allows you to take advantage of higher interest rates that may be available in the market. An FD returns calculator can help you calculate your returns properly. 
  • Convenience and Simplicity: Renewing an existing FD is often more convenient than starting from scratch with a new investment. It saves time and effort.


In conclusion, it's crucial to be aware of the consequences of not renewing or withdrawing your fixed deposits after maturity. Banks may auto-renew FD or transfer the maturity amount to your savings account at a lower interest rate, while companies tend to provide reminders and offer more flexibility. By renewing your fixed deposit account, you can enjoy higher returns, ease of management, and the benefits of compounding.

To make the most out of your fixed deposit investments and ensure a secure financial future, it's essential to stay informed and proactive. Regularly review your investments, compare interest rates, use FD return calculators, and seek professional advice when needed. Remember, Mahindra Finance offers a wide range of financial solutions that can help you make informed decisions and achieve your financial goals. Take charge of your fixed deposits today and secure a brighter tomorrow!


Q: What happens if I forget to renew my fixed deposit?

A: If you forget to renew your fixed deposit, it may be automatically renewed by the bank or company at their discretion. However, it's important to be proactive and keep track of your investments to avoid any unexpected outcomes.

Q: Can I withdraw my fixed deposit before the maturity date?

A: Yes, you can withdraw your fixed deposit before the maturity date by paying a penalty fee. However, this may result in lower returns compared to holding the deposit until maturity.

Q: Are there any tax implications when renewing a fixed deposit?

A: When you renew a fixed deposit, the interest earned is taxable based on your applicable income tax slab. It's important to consider the tax implications and plan your investments accordingly.

Q: Can I reinvest only the principal amount and withdraw the interest earned?

A: Yes, you have the flexibility to choose whether to reinvest only the principal amount or reinvest the total amount including interest gains. This decision depends on your financial goals and requirements.

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