Flexi Fixed Deposit

A Flexi-Fixed deposit is a special kind of deposit offered by Indian banks and in other countries as well. It is formed by combining a demand deposit and a fixed deposit. The depositor opting for a Flexi FD is able to avail of both the liquidity of savings and current accounts and the high returns of fixed deposits. Fixed Deposits have been one of the most popular and traditional saving instruments in India for years.

All flexi-fixed deposits have a major feature that combines the advantages of all three accounts, viz. savings and current accounts and fixed deposits, which is the "Auto-sweep feature (sweep-in)". Under this feature, the excess balance of a stipulated amount is transferred to a fixed deposit (FD) account automatically for a default term of one year.

Features of Flexible Fixed Deposits

  • Flexible tenure: Flexi fixed deposits are designed in such a way that they offer the advantages of flexible tenures. The depositor can select the tenure, as per his/her financial objectives.

  •  Competitive interest rates: Flexi fixed deposits usually provide higher interest than savings accounts, which in turn enables the depositor to create a large corpus.
  •  Investment amount: It is up to the Depositors to decide the investment amount they currently hold or on the basis of the corpus that they want to achieve at the end of the tenure.
  •  Premature withdrawal: Another major benefit of Flexi fixed deposits is that they allow liquidity to depositors with the premature withdrawal feature they provide. This benefit, however, varies from bank to bank that offers the Flexi fixed deposits. Hence, you need to make sure that you go through the rules and regulations before deciding on the final one.
  •  Loan facility: Depositors can avail of the benefit loan facility from the bank where they have their Flexi fixed deposit scheme by keeping it as collateral for the loan. However, you should make sure that you are aware of your bank's policies.
  •  Easy account opening process: Opening a Flexi Fixed Deposit account is easy, seamless, and hassle-free.
  •  Auto-renewal: One more feature that makes the Flexi FD enticing for a lot of investors is the hassle-free account opening process which is made even quicker and much easier with the auto-renewal facility. This means that a depositor has his/her Flexi fixed deposit account automatically renewed at the end of the policy tenure.

Difference between Flexi Fixed Deposits and Regular Fixed Deposits

Given below are some of the major differences between Flexi Fixed Deposits and Regular Fixed Deposits:

Features

Regular Fixed Deposit

Flexi Fixed Deposit

Liquidity

Not very liquid. Cannot withdraw funds before maturity without penalty.

More liquid than rgeular FD. Allows partial withdrawals and top-ups.

Interest Rate

Generally offers a fixed interest rate for the entire tenure.

Offers a slightly lower interest rate than regular FDs. Interest is calculated on the remaining balance after withdrawals.

Maturity

A fixed maturity period is chosen at the time of deposit.

Flexible maturity period. May offer auto-renewal after maturity.

Flexi Fixed Deposit Interest Rates

A lot of banks in India offer the Flexi Fixed Deposit scheme to their customers with competitive Flexi fixed deposit interest rates, which are mentioned below.

State Bank of India (SBI): The minimum deposit needed to open a Flexi fixed deposit scheme in the State Bank of India (SBI) is Rs. 5,000, while the minimum tenure starts from 5 years. This scheme offers its customers the convenience of customizing their deposit amounts through flexible installments.

ICICI Bank Flexi Deposit Scheme: The Flexi Deposit Scheme offered by ICICI Bank combines a Savings or Current account with a Flexi Deposit. Individuals should ensure they maintain a minimum balance of Rs. 10,000 for a Savings account or Rs. 20,000 for a Current account. The tenure for a Flexi Deposit account ranges from a minimum of 15 days to 91 days.

Axis Bank: Axis Bank’s Flexi Fixed Deposit scheme, Encash 24 Flexi Deposit, ensures liquidity like a Savings Account and the benefit of interest like a Fixed Deposit. The scheme term varies between 6 months to 5 years.

Union Bank of India (UBI): The ‘Union Savings Flexi Deposit Account’ is a Flexible fixed deposit scheme of Union Bank of India, designed to offer the dual purpose of fixed deposits and savings deposits. 

Bank of India: The ‘Star Flexi Recurring Deposit Scheme’ from the Bank of India offers its customers the convenience of opting between an individual and a joint account. The policy tenure ranges between 12 months and 10 years, which customers can opt for as per their investment objectives.

Disadvantages of Flexi Fixed Deposits

Here are some disadvantages of Flexi Fixed Deposits (FDs) to consider:

  • Lower interest rates: Compared to regular fixed deposits with a fixed tenure, flexi FDs typically offer lower interest rates. This is because you have the advantage of withdrawing funds throughout the tenure.
  • Penalties for early withdrawal: While they provide flexibility, flexi FDs might penalize you for withdrawing funds before the maturity date. These penalties can reduce your overall earnings.
  • Limited withdrawal flexibility: Some flexi FDs may restrict the amount or frequency of withdrawals you can make. This can limit your liquidity compared to a regular savings account.
  • Not ideal for long-term goals: Due to the lower interest rates, flexi FDs might not be the best option for long-term financial goals where you aim to maximize returns.

Comparison of FD rates

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