What is early withdrawal of savings?

Early withdrawal of savings means that you take back your deposit from the bank before the maturity date as originally agreed in the savings contract. Savings usually have a specific term, for example 1 month, 3 months, 6 months, 1 year or longer. When you withdraw your money before the maturity date, the interest you receive will not be at the initially committed rate but will be at the lower interest rate specified for early withdrawals.

There are many reasons why depositors have to withdraw their savings early: It could be due to sudden financial needs, this is the most common reason. When faced with situations such as medical expenses, school fees, or unexpected incidents, immediate access to savings is necessary.

Sometimes you come across an attractive investment opportunity and want to use your savings to invest to increase your profits. In addition, your financial goals may change over time, causing you to decide to withdraw your money early to reinvest or use it for other goals.

When you withdraw money before the maturity date, the interest you receive will be much lower than the initial interest rate committed. Banks often apply a non-term interest rate for early withdrawals, usually only from 0.1% to 1% per year.

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When you withdraw money early, you lose the chance of receiving a higher interest rate when it matures, which can impact your long-term financial planning. Some banks may impose a penalty for early withdrawal, further reducing the amount you receive.

To minimize the consequences of having to withdraw money early, you can apply measures such as: Always have a reserve fund to use in emergency situations, helping you avoid having to withdraw savings early.

Before making a deposit, carefully read the terms and conditions regarding early withdrawal interest rates and any penalties that may apply. Choose a deposit term that suits your financial situation and your plans for using your money to reduce the possibility of having to withdraw your money early.

Hao Nhien (synthesis)

Source: https://vtcnews.vn/rut-tien-tiet-kiem-truoc-han-la-gi-ar913232.html