What is overdraft against FD?

An overdraft is a financial transaction between a bank and an account owner. It enables them to spend or receive more cash than is available in their accounts up to the permitted limit. The customer uses an overdraft, for which the bank assesses interest at a specified price. Here, I will be guiding you on the concept of OD against FD.

What is the meaning of the overdraft against FD?

In my opinion, the most popular investment type is a fixed deposit. Because it has the ability to cover both short-term and long-term financial needs. In the situation of a major emergency, you can also suddenly take your FD money in the form of an overdraft against FD. You must pay a fine in order to accomplish that. One of the simplest ways to obtain money from the bank is through OD against FD. In this service, your fixed deposit capital is used as protection, and the funds are then disbursed to you as an overdraft.

Utilising the overdraft against the FD facility could help you avoid paying a fee. You may borrow money using this facility in exchange for a fixed-rate deposit. By obtaining an OD on your FD, you might pay for your additional costs while still collecting money on it. Overdrafts against FD value are frequently permitted by banks up to 90%. The relevant overdraft interest rates are only 1-2% more than the actual FD interest rate. Additionally, you will not be assessed interest on the total amount, rather, only the amount taken from the OD will be. This is all about what is overdraft against FD.

What is the process to apply for OD against FD online?

• Use your login information to access your net banking account.

• Navigate to the "Fixed Deposit" option on the main tab.

• Select "Overdraft facility against FD" from the menu.

• Fill out the form with the necessary information, such as the required sum, the requested term, etc.

• After that, send the form.

• Then, within a few days, your bank will review and confirm your application.

• The money will be credited to your account once it has been confirmed.

This is all I wanted you to know about the OD against FD.