Breaking a fixed deposit means withdrawing the money before the maturity expires. This may be necessary if you urgently require the funds or if there are better investment opportunities elsewhere. You will have to pay a cost; for instance you may receive an interest rate 1 per cent lower than the stated interest rate on the FD.
For example if you invested in a 3 year FD with 9 per cent and you break it after two years you may receive only 8 per cent interest for those two year instead of 9 per cent.
An alternative to breaking a fixed deposit is taking a loan against the FD. Such loans are quite easy to obtain with amounts ranging up to 90 per cent of the principal and accumulated interest.
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