A Flexi Fixed Deposit is deposit scheme banks offer. This financial instrument usually combines the features of a Fixed Deposit and a Demand Deposit. It also incorporates the advantages of three types of accounts, i.e., Savings, Current, and FDs. So, when you opt for a Flexi Fixed Deposit, you can avail of the liquidity of a Current and Savings Account and enjoy the returns of an FD.
Typically, a Flexi FD has an auto-sweep feature that automatically transfers the excess balance beyond a particular amount into the FD for a specified time.
Features and benefits
The characteristics and advantages of a Flexi Deposit Account include the following:
Flexible deposits
Banks let you open the Flexi FD with Rs. 10,000. Beyond this, you can save in multiples of Rs. 1,000. This sum can go up to Rs. 1,99,99,999 crore.
Premature withdrawals
You can liquidate your Flexi Deposits in multiples of Re. 1. However, this does not affect the remaining amount, and your balance continues to earn interest. The interest rate also remains the same at the initial contracted rate. When you link multiple FDs to your Savings Account, the bank liquidates the last FD first. This ensures that you enjoy the highest returns.
High returns on deposits
You can earn more interest by investing your money in a Flexi FD than by keeping the money in your Savings Account. Additionally, if you are a Premium Savings Account holder, you can enjoy a better interest rate on your Flexi Deposit Account.
Easy opening
Opening a Flexi Deposit is easy, and you can avail of one seamlessly and without hassle. However, ensure you know the balance thresholds of different Savings Accounts linked to your deposit before you opt for a Flexi FD.
Auto-renewal facility
When you open a Flexi FD, your account gets automatically renewed at the end of its tenure. This benefit makes this deposit scheme lucrative for customers and prevents them from worrying about renewals or missing out on interest income on their Flexi Deposits.
Loan facilities
Banks may also allow account holders of Flexi Deposits the option of applying for a Loan against it. Hence, customers can avail of a Loan by keeping their deposits as collateral.
Differences with a Regular FD
Flexi Deposits are different from a Regular FD and have an edge over them. A Flexi FD offers the convenience of high liquidity. You can withdraw funds from this deposit as you spend them, and the remaining funds continue to earn interest. Hence, you can liquidate a part of your Deposit Account and still earn interest on the remaining sum in the scheme at the initial contracted rate. However, this is not the same for a Regular FD.
