Break the FD or borrow?
Break the FD, or take a loan?
Need money for a few months? Compare breaking your FD with a loan against it, a gold loan and a personal loan — what each really costs.
Planning estimates for education — not financial advice. Rates and returns change.
What you need
Two lakh rupees
How long until you can pay it back (or refill savings) from income.
Your FD
Five lakh rupees
Used if blank: 6.25% — a 1-year bank FD today
Used if blank: 12 months — a year so far
Points off the rate.
Used if blank: 1 point — what many banks charge
Loan rates
Used if blank: 7.75% — about 1.5 points above the FD rate
Used if blank: 9.2% — a large bank's starting gold-loan rate
Used if blank: 10% — a large bank's starting rate
Used if blank: 2% — a common fee, plus GST
Break the FD
It costs you
₹5,646
Put back a month
₹33,333
for 6 mo
Loan against the FDCosts the least
It costs you
₹4,546
EMI
₹34,091
for 6 mo
Gold loan
It costs you
₹6,578
EMI
₹34,233
for 6 mo
Personal loan
It costs you
₹10,592
EMI
₹34,312
for 6 mo
What the numbers show
- 💡To raise ₹2 L for 6 mo, “Loan against the FD” costs the least: about ₹4,546 — against ₹10,592 for “Personal loan”.
- 📌A loan against the FD keeps the FD earning; you pay a little more than it earns (usually 1–2 points).
- 📌Ask whether the bank lets you break only part of the FD — then the rest keeps its rate.
- ⚠️Personal loans are the costliest here and check your credit score — keep them for when nothing else works.
Educational planning estimates, not financial advice.
What each way costs
- Interest
- Fees
- FD penalty
- FD interest given up
How it's worked out
Loans: the interest on equal monthly repayments over the months you choose, plus the fee (with GST). Breaking the FD: the bank cuts the rate on the interest already earned on the part you take out (the penalty), and that money earns nothing until you put it back — paying back in equal amounts, it is out for about half the time on average.
Banks usually lend up to 90% of an FD against it. Check your bank's own penalty and rates.