Withdrawing Savings Before Maturity: Interest Rate Calculation and Things to Know

The need to withdraw savings before maturity arises quite commonly when you need money urgently for purposes such as spending, medical treatment, investment or debt payment. Therefore, many people wonder whether it is possible to withdraw before maturity, what the interest rate is and what the procedure is. Let's find out the details with SeABank through this article.

Quick summary:

Depositors can withdraw their savings early, but may not receive high interest rates.

• Depositors can withdraw part or all of their deposits before maturity.
• Premature withdrawal is not allowed if the savings book is being used as collateral for a loan or the savings account is frozen.
• Early withdrawal of savings is free of penalty fees but has very low interest rates

Therefore, customers who need to rotate money can refer to some other solutions such as:

• Mortgage savings book
• Overdraft on savings account
• Use flexible savings forms

1. Can I withdraw my savings before maturity?

1.1. What is early withdrawal of savings?

According to Clause 1, Article 4 of Circular 04/2022/TT-NHNN, withdrawing deposits early is understood as: “Early withdrawal of deposits is the case where a customer withdraws part or all of the deposit before the maturity date, payment date, or settlement date of the deposit amount”.

In other words, when you deposit fixed-term savings, but due to personal needs, you want to retrieve the money earlier than agreed, that is withdrawing savings before maturity.

The depositor can choose the following 2 forms of early withdrawal:

• Partial withdrawal of savings before maturity: Only a portion of the deposited amount is withdrawn, while the remainder still earns interest according to the term agreed upon with the bank. This is an option that helps you still maintain the savings without losing all the interest.
• Full withdrawal of savings before maturity: When withdrawing the entire deposit before maturity, the entire savings amount will be calculated at the non-term interest rate (which is usually much lower than the term interest rate). This can significantly reduce the benefits you gain from saving.

1.2. Cases where savings can be withdrawn before maturity

When depositing savings at a bank, customers can completely perform early savings withdrawal in the following cases:

• Early withdrawal according to customer needs: Customers can proactively request the bank to withdraw part or all of the savings before the maturity date.
• Early withdrawal upon savings passbook finalization (closing): When the customer wants to close the savings account to switch to another product package or pool capital, the bank will assist with early finalization.
• Withdrawal when there is an incident regarding the depositor's documents/procedures: For example, when the account holder passes away, the legal heir can perform the procedure for early withdrawal of savings at the bank.
• Early withdrawal to finalize a loan at the same bank: In case the customer has both deposited savings and borrowed capital, the bank may allow early withdrawal of savings to finalize the loan.
• Early withdrawal according to specific bank regulations: Some banks have flexible policies, allowing customers to withdraw early while still enjoying preferential interest rates based on the actual time deposited (not applying the non-term interest rate).

1.3. In case of not being able to withdraw savings before maturity

Although customers have the right to withdraw their savings before maturity, banks do not always approve it. Here are some cases where you cannot withdraw your savings before maturity:

• Savings book is being used as collateral for the loan: At this time, the savings book used as collateral or pledge to borrow capital from that bank will be frozen until the loan is fully paid off.
• Savings accounts are frozen according to law: In case the savings account is involved in a dispute, litigation, or has a decision to freeze by a competent authority, the bank will temporarily suspend withdrawal transactions. This means that customers cannot withdraw their savings before maturity until there is a notice to cancel the freeze.

2. Advantages and disadvantages of withdrawing savings early

2.1. Advantages

Withdrawing savings before maturity helps customers quickly meet urgent financial needs without having to borrow or incur additional interest costs. Withdrawing savings before maturity also helps depositors be more proactive in managing their personal finances, easily using money for necessary expenses such as hospital fees, tuition fees or investments.

In addition, at some banks, customers can withdraw part of their money before maturity but the remaining amount is still calculated with term interest, thereby both solving the cash need and not losing all accumulated benefits.

2.2. Disadvantages

The biggest disadvantage is that customers will lose the preferential interest rate agreed upon initially, because the withdrawal portion is only calculated at the non-term interest rate - which is much lower than the term interest rate. This also disrupts long-term financial planning, when the expected profit is no longer guaranteed.

3. Will I get interest if I withdraw my savings before maturity?

According to Article 5 of Circular 04/2022/TT-NHNN, customers who withdraw savings before maturity still receive interest, but the interest rate will be different from the original. Specifically, if the customer withdraws the entire deposit before maturity, the bank will apply the lowest non-term deposit interest rate at the time of withdrawal. This is usually quite a low interest rate, only about 0.1% – 0.3%/year, depending on the bank.

In the case where the customer withdraws a portion of the deposit, the early withdrawn portion will also be calculated based on the non-term interest rate, just like a full withdrawal. The remaining principal amount in the savings passbook will continue to enjoy the term interest rate exactly according to the initial agreement with the bank.

Thus, withdrawing savings before maturity still yields interest but is usually very low. To limit losses, customers should consider withdrawing a portion instead of the entire amount, thereby having money to use while retaining the benefits from the remaining savings.

4. Is there a penalty fee for withdrawing savings before maturity?

Currently, most banks in Vietnam do not apply any penalty fee for early withdrawal of savings. However, the main disadvantage is that customers will no longer enjoy the term interest rate as initially agreed. Instead, the early withdrawal amount will only be calculated at the non-term deposit interest rate of only 0.1-0.2%/year (the lowest at the bank). This can be considered as "indirect damage" instead of a penalty fee.

5. Procedures for early withdrawal of savings deposits

To withdraw savings before maturity, customers can do it through many different methods. Below are detailed instructions for each method.

5.1. Withdraw money via Mobile Banking

• Step 1: Log in to your bank's Mobile Banking or Internet Banking application.
• Step 2: Select item "Save" or “Deposit”.
• Step 3: Select the savings book you want to withdraw early.
• Step 4: Press “Early settlement” and confirm the transaction as instructed (OTP, fingerprint or Face ID).
• Step 5: Check your payment account to make sure the money has been transferred.

5.2. Withdraw money directly at the transaction counter

• Step 1: Bring ID card/CCCD and savings book (if any).
• Step 2: Go to a bank branch or transaction office.
• Step 3: Fill out a request for withdrawal or early settlement.
• Step 4: Return the savings book to the bank staff for information verification.
• Step 5: Receive cash or transfer as needed.

5.3. Withdraw money at ATMs using bank cards

• Step 1: Insert your ATM card into the machine and log in with your PIN.
• Step 2: Select item "Save" or “Early withdrawal of savings”(if the bank supports).
• Step 3: Select the savings account you want to close and enter the amount you want to withdraw.
• Step 4: Confirm transaction.
• Step 5: Get cash in person or check your checking account balance.

6. 3+ Alternatives to early withdrawal of savings

Instead of paying off your loan early, you can consider the following alternatives to avoid losing the preferential interest rate.

• Pledging the savings passbook: You can use the savings passbook as collateral to borrow capital from the bank. This is a quite popular form, allowing customers to borrow a certain amount of money (often up to 90% of the value of the savings passbook) while still retaining the original interest rate for the deposit. Importantly, the interest rate for loans secured by savings passbooks is usually much lower than conventional consumer loans.
• Overdraft loan based on the savings account: Some banks allow customers to use overdraft services based on the savings passbook. This means you can spend exceeding the balance of your payment account within the granted limit, based on the value of the savings passbook as collateral.
• Using flexible savings deposit formats: With this type, customers can withdraw a portion of the principal at any time, while the remaining principal continues to enjoy the term interest rate as committed. This is an optimal choice for those who want to maintain long-term accumulation while still ensuring the ability to respond when urgently needing money.

Generally, withdrawing savings before maturity is absolutely possible, but customers need to consider carefully because the interest rate is usually very low compared to depositing for the full term. If it is not too urgent, you can choose alternative solutions such as pledging the savings passbook, overdraft loans, or using flexible savings products to preserve accumulated benefits.

If you want to learn more about SeABank's card products, you can contact the nearest transaction points or call Hotline 1900 555 587 or visit the website www.seabank.com.vn for more detailed information.