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The past 2 years, the Fixed Deposit rates were very low (~5.1 - 5.2 roi for 1-2 years) during which I had created multiple fixed deposits. However, with the rates on the rise now (6.75 for 1-3 years), I am trying to evaluate if it would be a good idea to liquidate my lower roi FDs and open new ones to maximise the returns I get. Some of the FD and liquidation details are as below:

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Can you please help me understand how to decide if I should liquidate (some or all of) the FDs?

Follow-up question: At what ROI would the liquidation become beneficial?

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  • Some are close enough to maturity, and for others the increase of s not substantial enough that I would “rate chase”. Heck… FD #1 is maturing next month, and others in March!!
    – RonJohn
    Jan 7 at 20:52
  • @RonJohn: Agreed. Ignoring the January to March, what about the rest ? Do you think there will be a difference ?
    – user96551
    Jan 9 at 7:12
  • It depends on the penalty for early withdrawal. At my US bank, there's a 2 month interest penalty for CDs (very similar to FD) less than 2 years in length. I used to rate chase, but have decided that it's too much effort for too little gain, since my CDs are pretty short term. However, if I'd opened a 5 year CD last year at 0.6%, I'd definitely eat the 5 month penalty to open a 4.15% CDs.
    – RonJohn
    Jan 9 at 18:17

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Compare the interest amount foregone for the remaining term of FD with the new interest amount at the new interest rate on the new principal amount for that remaining term.
Interest foregone = Total interest for the full term - Net interest given by the bank for the elapsed term. New principal amount = Original principal + Net interest given by the bank for the elapsed term - TDS

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  • This assumes no penalty for early withdrawal, which is unlikely. These are fixed term deposits; if customers could freely walk away with no penalty under a rate increase, then you'd get to have your cake and eat it too.
    – Grade 'Eh' Bacon
    Jan 10 at 19:09
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    @Grade'Eh'Bacon: Isn't that what column [d] is? OP subtracts that to get the Final Payable (column [e]).
    – user96551
    Jan 10 at 19:59

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