A Fixed Deposit (FD) is a popular savings tool among investors. These can especially be ideal for looking for low-risk investment options. However, traditional FDs come with fixed tenors and interest rates. These might not suit everyone’s financial needs. Flexi Fixed Deposits combine the benefits of an FD with the flexibility of a savings account. Here are the key features, benefits, and differences between Flexi FDs and regular FDs.
Key Features of Flexi Fixed Deposits
- Liquidity: Flexi Fixed Deposits offer greater liquidity. They allow partial withdrawals. This means you can access your money without breaking the entire deposit. This feature enhances the overall flexibility of your savings.
- Auto-sweep Facility: Flexi FDs come with an auto-sweep facility. The excess amount is automatically transferred to the FD. This happens when the balance in your savings account exceeds a set threshold. You can therefore earn a higher interest rate than a savings account. If the savings account balance drops below the minimum, funds are swept back to the savings account.
- Higher Interest Rates: Flexi FDs offer higher interest rates than regular savings accounts. The rates may be slightly lower than traditional FDs. However, the added flexibility compensates for this.
- Partial Withdrawals: Flexi FDs allow for partial withdrawals. It can be done without affecting the interest earned on the remaining balance. This is a significant advantage over regular FDs. With these, premature withdrawal often results in penalties and loss of interest.
- Variable Tenor: The tenor for Flexi FDs can vary. This offers you the option to choose a duration that aligns with your financial goals. This flexibility is beneficial for those who prefer short-term investments.
Benefits of Flexi Fixed Deposits
- Enhanced Flexibility: Flexi FDs offer the flexibility to access funds when needed. Being able to partially withdraw without breaking the FD keeps your funds safe. This feature also provides liquidity.
- Optimisation: The auto-sweep option moves funds from your savings account to the FD. This feature helps optimise your returns without requiring active management.
- Convenience: Flexi FDs let you use one account for both savings and fixed deposits. This eliminates the need to open separate accounts and track multiple investments.
- No Penalty on Withdrawals: Flexi FDs don’t charge penalties on partial withdrawals. This feature ensures that you can access your money without incurring additional costs.
- Tailored Tenors: Various tenors help align your investments with your financial goals. Flexi FDs offer the necessary flexibility. This is whether you need a short-term or long-term investment.
Differences Between Flexi Fixed Deposits and Regular FDs
- Liquidity: Flexi Fixed Deposits offer high liquidity with partial withdrawals. Regular FDs have low liquidity as premature withdrawal results in penalties.
- Interest Rates: Flexi FDs offer slightly lower interest rates than regular FDs. However, these are typically higher than savings accounts.
- Auto-Sweep Facility: Flexi FDs have an auto-sweep facility that automates fund transfers. This feature is not available with regular FDs.
- Partial Withdrawals: Flexi FDs allow partial withdrawals without penalties. Regular FDs do not allow this without penalties.
- Tenor Flexibility: Flexi FDs have variable tenors and can be short or long-term. Regular FDs have fixed, pre-determined tenors.
How to Open a Flexi Fixed Deposit
- Choose a Bank/NBFC: Select a bank/NBFC that offers high interest rates and features for Flexi FDs. Bajaj Markets is one such platform where you can explore various options.
- Eligibility and Documentation: Ensure you meet the eligibility criteria. Make sure you have the necessary documents. These include identity proof, address proof, and a passport-sized photograph.
- Application Process: You can apply online through the bank’s website or visit a branch. Fill out the application form and submit the required documents. Then proceed to deposit the initial amount.
- Easy Management: Once your Flexi FD is active, you can manage it online or via mobile banking apps.
Considerations Before Opting for a Flexi Fixed Deposit
- Interest Rate Comparison: Compare the interest rates offered by various banks and NBFCs. While Flexi FDs offer flexibility, the rates might be slightly lower than regular FDs. Evaluate if the trade-off between flexibility and interest rate suits your financial goals.
- Tenor Selection: Choose a tenor that aligns with your financial objectives. Flexi FDs offer the benefit of variable tenors. This means you can opt for short-term or long-term deposits based on your needs.
- Minimum Balance Requirements: Check the minimum balance requirements. This should be done for both the savings account and the Flexi FD. Ensure you can maintain these balances to avoid any penalties or disruptions in the auto-sweep facility.
- Bank/NBFC Reputation: Opt for reputed banks or NBFCs with a strong track record. This ensures the safety of your deposits and the reliability of the services provided.
Flexi FDs offer a blend of the high interest rates of regular FDs and the liquidity of a savings account. They provide an alternative for those needing flexibility and returns on their savings. The benefits of liquidity and convenience make them a great choice for many. Consider your financial goals and compare offerings from different banks and NBFCs. You can then choose a Flexi FD that best meets your needs.