Flexi Fixed Deposit (FD)
We live in a world where we wish to experience the best of everything, often hoping to mix the features of different products in a bid to create a new and unique product which offers the best there is.
While such ideas might occupy a lot of space in our brains, practically implementing them can be a huge issue, in most cases.
There are certain products which have managed to combine different benefits into a new element, bridging gaps and improving the quality of life.
What is a Flexi Fixed Deposit?
A flexi fixed deposit, as the name suggests is a fixed deposit which offers flexibility and convenience to customers. It is traditionally a combination of a fixed deposit and a recurring deposit/savings account, ensuring customers get the benefit of high interest rates offered by Fixed Deposits plus liquidity offered by saving accounts.
Banks offering Flexi Fixed Deposit Schemes
A number of banks in India offer flexi fixed deposit schemes to customers, some of which are mentioned below.
Union Bank of India- Union Bank of India offers a flexi fixed deposit scheme which goes by the name of "Union Savings Flexi Deposit Account".
This scheme merges the features of fixed deposits and saving deposits, offering a unique entity to customers.
Allahabad Bank - The "Flexi Fix Deposit" scheme offered by Allahabad Bank offers maximum returns to customers without them having to sacrifice liquidity of their funds.
The minimum deposit required for this account is Rs 25,000.
Bank of Baroda - Bank of Baroda offers Flexi Deposit Schemes for corporates, helping them manage their funds efficiently, with deposit periods ranging from 7 days to 1 year. The minimum deposit under this scheme is Rs 5 crores.
State Bank of India - State Bank of India offers flexi FDs under its Flexi Deposit Scheme with a minimum deposit requirement of Rs 5,000 and a minimum tenure of 5 years. Individuals can choose to increase their deposit through flexible instalments.
Bank of India - Bank of India offers a Flexi Fixed Deposit under the name of "Star Flexi Recurring Deposit Scheme" which can be opened either as an individual or joint account. Terms for this deposit range from 12 months to 10 years, offering customers flexibility and ease of operation.
Axis Bank - Axis Bank offers Flexi Fixed Deposits under the name of "Encash 24 Flexi Deposit", combining the liquidity of a Savings Account with the interest of a Fixed Deposit. The term for this deposit ranges from 6 months to 5 years.
Features and Benefits of Flexible FD
Flexi Fixed Deposits offer a host of features and benefits to account holders, some of which are mentioned below.
- Attractive interest - Flexi Fixed Deposits earn higher interests compared to Savings Accounts, enabling one to earn more through their money.
- Flexible tenures - Different banks have different tenures for the flexi deposit schemes, ensuring one finds a tenure which best suits his/her financial needs.
- Investment amount - Individuals can choose the amount they intend to deposit, with different banks allowing different amounts as deposits.
- Premature withdrawal - Most banks allow premature withdrawals from flexi fixed deposit accounts, subject to individual policies in place.
- Loan facility - Account holders can generally avail loans against flexi fixed deposits, subject to policies implemented by banks.
- Easy to open - Opening a Flexi Fixed Deposit account is simple and hassle free, with most banks following a fast and transparent process.
- Auto renewal - Banks generally allow auto renewal of flexi FDs, ensuring account holders don't have to worry about renewal.
How Flexi Fixed Deposits differ from Normal Fixed Deposits
Flexi Fixed Deposits offer certain benefits over normal fixed deposits, primarily due to the flexibility and liquidity they offer. In a normal fixed deposit, individuals generally deposit a certain sum of money for a particular period of time, with this amount earning fixed interest.
Withdrawing this amount before maturity is generally not permitted, which can be a problem in emergencies. Flexi Fixed Deposits overcome this problem by allowing account holders to withdraw certain sums of money, which could be from their savings/current account, which is generally merged with a fixed deposit in flexi FDs.
FAQs on Flexi Fixed Deposit
- How can one make withdrawals from a Flexi Fixed Deposit?
Withdrawals can be made by intimating the bank, with most banks requiring advance intimation.
- Who can open a flexi fixed deposit?
Different banks have different eligibility criteria which an individual should meet in order to open a flexi fixed deposit. Most banks offer individual and joint flexi FDs to customers.
- Is the interest rate static during a term?
No, the interest rate generally varies depending on the amount deposited, with the fixed deposit component earning higher interest compared to savings component.
- Is TDS applicable on flexi fixed deposits?
Yes, TDS is applicable on interest earned.
- What is a Flexi Fixed Deposit Scheme?
The Flexi Fixed Deposit Scheme is a type of deposit account offered by banks that combines the features of both a savings account and a fixed deposit. This type of deposit scheme allows the customers to enjoy the flexibility of withdrawing funds as needed while earning higher interest rates compared to traditional savings accounts.
- How does the Flexi Fixed Deposit Scheme work?
The customers are required to deposit a lump sum amount into their account under the flexi fixed deposit scheme. This lump sum amount is then divided into fixed deposit and savings components. The fixed deposit portion earns higher interest rates, while the savings component remains liquid for withdrawals.
- What are the benefits of a Flexi Fixed Deposit Scheme?
Some benefits of a Flexi Fixed Deposit Scheme include earning higher interest rates on the fixed deposit portion, the flexibility to withdraw funds without breaking the fixed deposit, and the ability to earn interest on the savings component.
- Is it possible to withdraw money from my Flexi Fixed Deposit account anytime?
Yes, you are allowed to withdraw funds from your Flexi Fixed Deposit account anytime without affecting the fixed deposit portion. However, every bank has certain terms and conditions, such as maintaining a minimum balance or a minimum tenure before withdrawal. It is important to check with the bank and read their terms and conditions before making a withdrawal.
- Will I be charged a penalty for withdrawing money from my Flexi Fixed Deposit account?
Depending on the bank's policies, there may be penalties or restrictions for withdrawing funds from the fixed deposit portion before the maturity date. It's essential to check the terms and conditions of the scheme with your bank.
- How much is the minimum deposit amount required for a Flexi Fixed Deposit account?
The minimum deposit amount required for a Flexi Fixed Deposit account varies from bank to bank. It's advisable to check with your bank for specific details on minimum deposit requirements.
- Is it possible to convert my existing fixed deposit into a Flexi Fixed Deposit account?
Some banks may allow you to convert your existing fixed deposit into a Flexi Fixed Deposit account. However, this option may vary depending on the bank's policies and the terms of your existing fixed deposit.
- How is the interest calculated in a Flexi Fixed Deposit account?
The interest in a Flexi Fixed Deposit account is typically calculated based on the combined balance of the fixed deposit and savings components. The fixed deposit portion earns higher interest rates, while the savings component earns interest at regular savings account rates.
- Are there any tax implications associated with a Flexi Fixed Deposit account?
Interest earned on both the fixed deposit and savings components of a Flexi Fixed Deposit account is subject to taxation as per applicable income tax laws. It's advisable to consult with a tax advisor for specific tax-related queries.
- Can I avail myself of loans against my Flexi Fixed Deposit account?
Some banks may offer the facility of availing loans against the fixed deposit portion of a Flexi Fixed Deposit account. However, the availability of this feature may vary depending on the bank's policies and eligibility criteria.
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