Are you seeking a secure and flexible method to increase your savings? Look no further. This blog post has precisely what you are looking for - Flexible fixed deposits! As banking systems have changed, new products such as the flexi FDs have arisen, offering investors even more possibilities.
Flexi fixed deposit combines fixed deposits and savings accounts to provide some unique features. This is an excellent financial tool that gives you the best of both worlds in terms of security and flexibility. It’s a pretty popular choice for Indian savers due to its safety and reasonable rates.
So sit back, relax, and prepare to learn a transformational method to make your money work for you!
What is Flexi Fixed Deposit?
Flexi fixed deposits are a unique type of deposit that banks in India and other countries make. This form of deposit combines the flexibility of savings and current accounts with the high rates of fixed deposits. It is an excellent choice if you want to maximise profits while keeping liquidity. One significant characteristic that distinguishes flexi fixed deposit is the "auto-sweep feature (sweep-in)." Any surplus balance beyond a particular level is automatically moved to a flexi fixed deposit account for one year. This enables you to get the most out of your money while maintaining accessibility.
7 Unique Features of Flexible Fixed Deposits
Let's take a deeper look at the critical aspects of flexi deposits that make them an attractive option for savvy investors like you!
1. Simple Account Opening Process
Flexi fixed deposits make opening an account simple and easy. This means you may begin investing without any extra delays or paperwork.
2. Flexible Tenure
Unlike standard fixed deposits, flexi FD provides many tenure alternatives to meet your individual needs. Whether you are searching for short-term or long-term investments, you may pick a tenure that fits your financial objectives.
3. Higher and Competitive Interest Rates
One of the most appealing features of flexi FD is the opportunity to earn higher and competitive interest rates on your investment. So, your money works harder for you, helping you maximise your returns.
4. Investment Amount
Whether you have a small or large sum to invest, flexi deposits accommodate various investment amounts. This feature makes them accessible to a wide range of investors.
5. Premature Withdrawal
Financial requirements might develop unexpectedly. Flexible FDs allow for premature withdrawal. So, they give you the freedom to access your savings when you need them the most.
6. Loan Facility
Flexi deposits provide the option to borrow against your account, in addition to the risk of premature withdrawal. This function can be quite helpful in times of financial necessity.
7. Auto-Renewal
Flexi FD provides auto-renewal for people who prefer a hands-off investment strategy. This implies that your investment is automatically renewed at maturity. They give you consistent returns without the need for manual action.
What's the Difference Between Flexi Fixed Deposits and Regular Fixed Deposits?
When comparing flexi deposits to regular FDs, the benefits of Flexi FDs clearly outweigh the disadvantages. This is primarily due to the fact that they specialise in liquidity convenience. They allow you to take out loans. Furthermore, you can withdraw a certain amount from your linked savings or current bank account, which has been integrated with flexi FD. So, if you are thinking about investing in an FD but want more flexibility and liquidity, a flexible FD may be precisely what you need!
Points to Take into Account Prior to Investing in a Flexi FD
Before you decide to invest in a flexi deposit, there are certain vital factors to consider:
- Tax Implications: The interest you earn on flexible FDs is taxed according to your income tax bracket.
- Partial Withdrawal Charges: Some banks may levy a fee for each partial withdrawal. It's critical to inquire about these costs before making any decisions.
- Minimum Balance Requirement: The linked savings/current account may have a minimum balance requirement that must be met. Going below this limit may result in penalty costs.
FAQs
1. Who is eligible for a flexi fixed deposit?
All Individuals interested in accelerating the growth of their savings can invest in a flexible deposit. It benefits everyone, whether they are salaried, self-employed, minors, or older citizens.
2. How does flexi deposit work?
Flexi deposit allows you to deposit a lump sum amount into your flexi deposit account while still having the option to withdraw cash as needed. It combines the high yields of a fixed deposit with the flexibility of liquidity.
3. How do you withdraw money from the flexi fixed deposit account?
It is easy to withdraw money from your flexi deposit account. You can make partial withdrawals or prematurely terminate your deposit online or at any nearby bank. The withdrawal amount is debited to your associated account.
4. Is the interest rate static during a term?
The interest rate is not set during the period. It usually fluctuates according to the amount invested. It’s noteworthy that fixed deposits generate more interest than savings accounts.
5. Is TDS applicable on flexible fixed deposits?
Yes, TDS applies to the interest received on flexi fixed deposits.
6. Is TDS (Tax Deducted at Source) applied to Flexi Fixed Deposits?
Yes, TDS is typically applied to the interest earned on your Flexi Fixed Deposit.
7. Does the interest rate stay the same during the term?
No, the interest rate generally varies depending on the amount deposited. The fixed deposit portion typically earns a higher interest rate than the savings account portion.
8. Can I choose the tenure for my Flexi Fixed Deposit?
Yes, most banks offering Flexi FDs allow you to choose a tenure that suits your needs. The tenure can range from a few months to several years, depending on the bank's terms.
