Flexi Fixed Deposit: 9 Features and Benefits You Need to Know

While Fixed Deposits (FDs) can offer high and more stable returns, they are usually less liquid. Flexi FDs are innovative investment instruments that combine the benefits of FDs and savings accounts.

It is a blend of high interest rates offered by traditional fixed deposits and the flexibility of a savings account. So, a flexi fixed deposit can be a viable option for building a sizeable corpus while keeping your funds liquid.

Understanding Flexi Fixed Deposits

These FDs do not come with a predefined lock-in period and give you the flexibility to withdraw funds whenever you need them. Here is a brief overview of these deposits:

The deposit is linked to your savings account, and you set a balance limit

Any amount in your savings account beyond this limit is transferred to the deposit

The amount in the FD account earns interest at higher rates than a savings account

You can withdraw funds from your savings account like usual, and in case of a shortfall, the balance will be met by the deposit

Unlike conventional FDs, these deposits allow you to make partial withdrawals without closing the account

Withdrawals from flexi FDs do not attract any penalty charges, which is the case with regular FDs

Comparing before investing is crucial as interest rates vary from issuer to issuer. On Bajaj Markets, you can easily compare different options from leading financial institutions and choose the best-suited one. Visit this site to invest in a fixed deposit account that aligns with your financial objectives and commitments.

Features and Benefits of Flexi Fixed Deposits

Unlike regular fixed deposits, your savings are not locked with flexi FDs. In addition to this, these deposits offer several other advantages, some of which are listed below:

Simple and Convenient

With the adoption of the latest technologies by banks and financial companies, it has become quite easy to open a flexi FD account. Most institutions in India come with a simple process. In most cases, all you have to do is fill out an online application form and upload a few basic documents.

Higher Interest Rates

In comparison to savings accounts, flexi FDs provide higher returns on your deposits. Certain flexi deposits also provide compounding benefits, which allow your savings to grow at a higher rate.

Provides Fixed Income

These deposits also offer a predictable way of earning a fixed income. If you maintain a specific amount in your fixed deposit account, you can get a stable income that complements your regular salary.

Flexibility to Choose the Investment Amount

With a flexi fixed deposit, you must pay a lump sum once. Since they do not have a minimum investment requirement, you can begin investing with any amount you deem fit. Check the eligibility criteria before applying, as different banks have varying requirements.

Flexible Liquidity Option

In flexi deposits, you can stay invested as long as you desire. Since they do not have any lock-in period, you can withdraw the deposited sum as and when a need arises. Considering the available liquidity, this makes them more attractive investment options than regular FDs.

Avoids Premature Withdrawal Charges

Unlike regular FDs, issuers do not levy a penalty charge when you withdraw funds from flexi FDs. The absence of these added charges can help you save significantly each time you withdraw funds.

Auto Reverse Sweep-In

Many banks also provide an auto-reverse sweep-in facility on flexi FDs. This feature automatically transfers funds from your FD to your savings account if there is any shortfall to honour the withdrawal requests. This feature ensures that you can enjoy liquidity whenever you need funds.

Loan Against Flexi FD

Some issuers also allow you to get additional funds by pledging your Flexi deposits as collateral. The interest rates on such loans are also often lower than other unsecured loan options, making it a cost-effective solution.

However, all issuers do not offer this facility, which is why you must check with the issuer beforehand.

Auto-Renewal Facility

Tracking the maturity date for your FD investment can be challenging, especially if you have invested in multiple instruments. To ensure you do not miss renewing your investment, many flexi deposit issuers offer an auto-renewal facility.

If you opt for this feature, the issuer will automatically renew your investment on maturity. The renewal will happen for the same tenor with the maturity amount as the principal amount. Some issuers may even offer an additional interest rate if you choose auto-renewal.

Conventional and flexi FDs come with distinct advantages. To choose the right option, rely on your investment amount, objectives, and future financial commitments. If you can hold your funds for a longer tenor, conventional FDs can be the right option, as they offer higher interest rates.

If you are seeking a balanced investment option that allows easy access to funds with higher earning potential, invest in a flexi fixed deposit. With their easy partial withdrawals and deposit flexibility, these instruments can become a valuable addition to your portfolio.