Flexi Fixed Deposit
SBI Flexi Deposit Scheme: Depositors can decide to vary his/her installment amount, instead of a single fixed installment every month as in regular FDs. One can also choose the number of monthly.
A Flexi-Fixed deposit[1] is a special kind of deposit offered by banks in India and other countries. It is a combination of a demand deposit and a fixed deposit. The depositor is able to enjoy both the liquidity of savings and current accounts and the high returns of fixed deposits.
Mode of working[edit]
A Flexi-Fixed deposit has two features which effectively combine the benefits of savings and current accounts and fixed deposits:
- Flexi Fixed Deposit scheme requires you to pay a lump sum amount once. You have the liberty to choose any amount you want to invest. Different banks have different deposit criteria, make sure to check with the bank before opening your Fixed Deposit account. Flexibility in Investment Duration.
- As applicable to Savings Bank Deposit and Fixed Deposit in force from time to time. Interest will be paid on a quarterly basis on the Fixed Deposit and credited into Savings Deposit Account. Other Features: A passbook will be issued to the depositor with all the details of SB Flexi Account, the linked FD Flexi Account.
- A Flexi-Fixed deposit is a special kind of deposit offered by banks in India and other countries. It is a combination of a demand deposit and a fixed deposit. The depositor is able to enjoy both the liquidity of savings and current accounts and the high returns of fixed deposits.
Deposing An Expert Witness
- The 'Auto-sweep feature (sweep-in)': The balance in excess of a stipulated amount is automatically transferred to a fixed deposit (FD) account for a default term of one year. By this transference, amounts in excess of a fixed limit can earn a substantially higher rate of return. FDs formed through auto sweep carry the interest rate on FD of one year, based upon the rate on the day of the auto sweep. Hence, the Flexi Fixed deposit scheme has two components: a savings and current account component, and a fixed deposit account component.
- Reverse sweep (sweep-out): In case of insufficient funds in a savings account to honour any debit instruction (e.g., when the customer wants to withdraw money through cheque or through an ATM), the balance in the FD to the extent needed to meet the shortfall is automatically withdrawn in multiples of ₹1000 (or any other amount set by the bank). The remaining balance in the FD continues to earn higher interest at the original rate applicable to FDs. In the event the customer wants to withdraw more than what is deposited in his savings account, the bank would withdraw money from the fixed deposit component.
Many banks do not allow customers to take out loans against amounts in the FD component of Flexi Fixed deposits.[2][3]
References[edit]
- ^'Flexi Fixed Deposit (FFD): All You Need to Know About It'. Retrieved 20 December 2019.
- ^'Andhra Bank'. andhrabank.in. Retrieved 27 April 2015.
- ^'ORIENTAL BANK OF COMMERCE'. obcindia.co.in. Retrieved 27 April 2015.
There’s a reason why humans are one of the smartest beings of this mother earth, and the reason is they know to evolve with time. We live in such a world, where we keep doing experiments to create something which will not only bring stability in our lives but also provide more benefits. We have implemented this hybrid mentality to everything from food to jewelry to transportation, so why not in the investment horizon. Our habit of mixing the features of different products, and creating a brand new advanced product, in order to experience the best possible outcome, is known to all.
The new age banks have understood the need of the hour, and has already introduced a new kind of investment tool i.e. called as the Flexi Fixed Deposit (FFD). It has been specifically created in order to combine different features into one single product, so that it can easily help investors to improve their quality of lives by bridging the gaps as much as possible.
Contents
- Flexi Fixed Deposits: Benefits & Features
What isFlexi Fixed Deposit?
It is a type of a special fixed deposit scheme introduced by the top most banks of India and other countries in order to provide flexibility and convenience to its customers. It is becoming quite popular nowadays, and it’s basically nothing but a nice combination of a fixed deposit account and a savings/current account. Flexi Fixed Deposit (FFD) ensures that the account holder is able to enjoy the higher interest rates offered by the fixed deposit schemes and the liquidity offered by the current/savings account both.
In most cases a Flexi Fixed Deposit scheme follows the “Reverse Sweep” methodology, which I will try to explain now with the following example.
Flexi Fixed Deposit Axis Bank
Suppose you have a flexi fixed deposit account with a certain bank, and you have also linked your savings/current account with that FFD account. Let’s assume you have 20000 INR in your savings account and 50000 in your fixed deposit account. Now if you try to withdraw 30000 INR from your account in the form of cheque or ATM or by any other means, then in order to honor that debit instruction, the extra 10000 INR will be debited from your fixed deposit account. So now your savings account will have a zero balance and your FD account will have 40000 INR balance, and this remaining funds will continue to earn higher interest at the original rate applicable to the existing FDs.
So in short, in case of an account holder wants to withdraw more amount of money than what is deposited in his/her savings account, then the excess amount will be adjusted from the fixed deposit component to honor debit instruction.
In order to survive every species of this world has tried to evolve with time, and those who didn’t manage to do that successfully were extinct. This “survival of the fittest” rule applies to the finance and investment tools as well. It is quite apparent that the Flexi Fixed Deposit schemes are having some serious advantages over the traditional fixed deposit offerings, and this section we will try to explain those benefits.
As a customer you can easily decide the amount that you would like to invest in the FFD schemes. You can also choose the exact tenure that you think suits your requirements. However, you must check with your preferred bank, because the minimum amount and tenure generally varies from one bank to the other.
If you open a FFD account, and link it with your savings or current account, then you will be automatically provided with freedom of liquidity. This instantly offers peace of mind for the account holder, as they don’t get a feeling that their money is stuck.
The most annoying thing with the traditional FDs is that you just can’t prematurely withdraw your own amount. In fact if you are in dire need of the amount, and don’t have other options than premature withdrawal, then the bank will levy hefty penalty on you. But, in the case of the Flexi Fixed Deposits, we can withdraw our amount whenever you need, there’s no penalty whatsoever for premature withdrawal. That’s why the new age FFD schemes are getting lots of traction nowadays as it offers premature withdrawal to ensure the liquidity for the customers in times of need.
Almost all the banks offers auto renew option for their respective FFD schemes. So you don’t need to remember the exact dates in order to ensure that your flexi fixed deposit account is getting renewed. Automatic renewal is actually making investment in FFDs hassle-free and quick.
If you need some quick cash for something, then you can easily pledge your Flexi Fixed Deposit as collateral in order to apply for a loan. However, some banks don’t allow loans on FFDs, so you need to check that with your banks.
A Flexi Fixed Deposit Account earns a much better rate of interest than Savings/Current account. In fact, in spite of offering flexibility and liquidity, it offers high interest rates, so that a depositor can build a large corpus over time by earning more money on their savings and investments.
Almost all the top banks of India allows its depositors to open FFD account with them. So we must thoroughly compare in order to choose the ideal one. Here, I will be talking about my favorite ones, which, in my opinion, are the 5 Best Flexi Fixed Deposit Schemes of India right now.
- ICICI Flexi Fixed Deposit Scheme
- Axis Encash 24 Flexi Deposit Scheme
- SBI Flexi Deposit Scheme
- Union Flexi Savings Deposit Scheme
- BoB Suvidha Fixed Deposit Scheme
I have started Investable to make people aware about different products related to our financial sectors, so that people can understand the real value of investing. I am assuming that this article will be able to make you aware about the Flexi Fixed Deposit schemes, and their importance. If you have any doubts or questions regarding this then you can ask that in the comments below.