Expensive Loan vs. FD: Is Breaking Your Fixed Deposit a Smart Debt Move?

• Compare FD returns (6-7% taxable) with high loan interest (15-35% for unsecured loans) to assess the financial gap.
• Breaking an FD is often wise for expensive, unsecured loans (credit card, personal loan) if the FD isn't for essential goals or emergencies.
• Avoid breaking an FD if it serves as an emergency fund or if the loan is cheap and offers tax benefits (e.g., home loan).
• Always consider hidden costs like premature withdrawal penalties and reduced interest rates on the FD.
• An alternative is a loan against FD or an overdraft, which offers lower interest rates while keeping your FD intact.

Why It Matters: Evaluate loan type, FD purpose, and hidden costs before breaking an FD to repay debt.