How to Transfer FD from One Bank to Another

Transfer FD Between Banks

Found a better interest rate at another bank and wondering if you can transfer your fixed deposit? While you cannot directly transfer an FD from one bank to another like you transfer a bank account, there are smart ways to move your money to get better returns. This guide explains your options and how to execute the switch efficiently.

Can You Directly Transfer an FD Between Banks?

The short answer is no. Fixed deposits cannot be transferred directly from one bank to another. An FD is a contract between you and a specific bank for a specific tenure and interest rate. There is no mechanism like AEPS or NEFT that allows FD portability between banks.

However, you can effectively move your money by closing the FD at the old bank and opening a new one at the new bank. The key is to do this strategically to minimize losses and maximize gains.

How to Move Your FD to Another Bank

Step 1: Compare Interest Rates

Before making any move, calculate whether switching actually benefits you. Consider:

The interest rate at your current bank vs the new bank.
The premature withdrawal penalty at your current bank (typically 0.5-1%).
The remaining tenure of your current FD.
The net benefit after accounting for the penalty.

Step 2: Calculate the Break-Even

Here is a practical example:

Current FD: Rs 5 lakh at 6.5% for 3 years (1 year completed, 2 years remaining).
New bank offers: 7.5% for 2 years.
Premature closure penalty: 1% (effective rate for 1 year at old bank becomes 5.5%).
Interest lost due to penalty on 1 year: approximately Rs 5,000.
Extra interest earned at new bank over 2 years: approximately Rs 10,000.
Net benefit: Rs 5,000 — it makes sense to switch.

If the rate difference is small (0.25% or less), it may not be worth switching after accounting for the penalty.

Step 3: Close the FD at Your Current Bank

Follow the premature closure process:

Online: Log in to net banking, go to FD section, select “Premature Closure,” review the penalty, and confirm.
Offline: Visit the branch with your FD receipt, fill out the closure form, and submit.

The maturity amount (with reduced interest and penalty deducted) will be credited to your savings account.

Step 4: Transfer Funds to the New Bank

Transfer the closed FD amount from your savings account to your account at the new bank using NEFT, RTGS, or IMPS. For large amounts (above Rs 2 lakh), RTGS is the fastest option.

Step 5: Open a New FD at the New Bank

Log in to the new bank’s net banking or visit the branch. Open a fresh FD with the transferred amount at the new, higher interest rate. Choose your preferred tenure, payout option, and maturity instructions.

When Does It Make Sense to Switch?

Significant rate difference: A difference of 1% or more usually justifies the switch, especially for long remaining tenures.
Early in the FD tenure: Switching within the first few months minimizes the penalty impact.
Large deposit amounts: Even a small rate difference becomes significant on large deposits. On Rs 10 lakh, a 0.5% difference means Rs 5,000 extra per year.
Bank creditworthiness concerns: If your current bank is facing financial trouble, moving to a safer bank is prudent regardless of the rate.

When Should You NOT Switch?

Close to maturity: If your FD matures in a few months, wait for maturity and then open at the new bank.
Small rate difference: If the new rate is only 0.25% higher, the premature closure penalty will likely eat up the gains.
Tax-saving FD: You cannot close a tax-saving FD before 5 years, so switching is not an option.
Loan against FD: If you have an outstanding loan against the FD, you must repay the loan before closing the FD.

Switching FD Banks: A Checklist

Compare rates and calculate the net benefit after penalty.
Check if you have any loans or liens against the FD.
Ensure your KYC is complete at the new bank.
Close the FD at the old bank.
Transfer funds to the new bank.
Open the new FD immediately — do not leave money in savings account earning low interest.
Update your FD tracking records.

Special Cases

Transferring Within the Same Bank

If you want to move your FD from one branch to another within the same bank, this is possible without closing the FD. Visit either branch and request a branch transfer. Your FD terms remain unchanged.

Transferring FD Ownership

In some cases (such as inheritance or court orders), FD ownership can be transferred to another person within the same bank. This requires specific documentation including legal heir certificates or court orders.

Manage Your FD Switches with Bachatt

Keeping track of interest rates across banks and knowing when to switch can save you thousands of rupees. Bachatt helps you compare FD rates, track your deposits, and make informed decisions about when to switch. Built for India’s self-employed individuals. Download Bachatt today.