A Flexi Fixed Deposit (Flexi FD) is a deposit scheme that combines the features of a Fixed Deposit with the convenience of a savings or current account. It enables depositors to earn higher interest on surplus funds while retaining easy access to their money whenever required. By automatically linking savings with fixed deposits, a Flexi FD offers an effective balance between liquidity and stable returns.
Unlike a traditional Fixed Deposit, a Flexi Fixed Deposit allows eligible partial withdrawals without requiring the entire deposit to be closed, subject to the financial institution's terms and conditions. The remaining balance continues to earn interest at the applicable Flexi FD rate, making it a practical option for individuals who want to maximise returns while maintaining access to funds for unexpected expenses or short-term liquidity needs.
What is a Flexi Deposit?
A Flexi Deposit is a deposit facility that links a savings or current account with a fixed deposit. Surplus funds above a specified threshold are automatically transferred into a fixed deposit to earn higher interest, while funds can be accessed when needed through an automatic sweep-back facility, subject to the financial institution's terms and conditions.
Features and benefits of flexible fixed deposits (FD)
1. Flexible tenures
Flexi FDs offer you the freedom to choose an investment duration that meets your financial needs and objectives. You can invest in flexi fixed deposits to meet short-term goals like saving up for a vacation or long-term goals like retirement planning.
2. Attractive interest rates
Flexi fixed deposit interest rates are higher than regular savings bank accounts. Better returns on the investment helps you grow your corpus and meet your financial goals faster.
3. Premature withdrawal
Flexi fixed deposit schemes are preferred for their high liquidity quotient. In the event of a financial emergency, you can withdraw a part of your saved funds without dissolving the FD. After a partial withdrawal, the remaining funds in your FD account keep earning interest.
4. Minimum investment amount
With a flexi FD scheme, you have the liberty to choose how much you wish to invest. You can assess your liquidity needs and financial goals to decide on the right deposit amount. However, different banks have varying deposit criteria, so it is best to examine the bank’s policies before investing.
5. Auto-renewal
Most banks offer an auto-renewal option with flexi FD schemes to help make the renewal process easy and hassle-free. In other words, you do not have to remember the maturity date of the FD account to renew it since the bank automatically renews it.
6. Loan facility
You can use your flexi fixed deposit account as collateral to avail of a short-term loan from the bank. Usually, banks allow depositors to borrow up to 95% of the funds in their FD account. The interest rates on these loans are slightly higher than the flexi FD interest rate but much lower than personal loans. However, you should review the bank’s policies and charges carefully before availing of this credit facility.
7. Simplified account opening
Opening a flexi fixed deposit account is hassle-free and easy. Most banks offer a simple and transparent process that is completely digitised. So, you can open a flexi fixed deposit without visiting a physical bank branch.
Difference between flexi fixed deposits and regular fixed deposits
Below are the differences between Flexi FDs and Regular FDs:
| Feature | Flexi Fixed Deposit | Regular Fixed Deposit |
| Liquidity | Allows deposits and withdrawals from the linked savings account as needed, offering high liquidity without penalties. | Funds are locked in for a predetermined tenure; premature withdrawals may incur penalties, and additional deposits are not permitted during the tenure. |
| Interest rates | Offers competitive interest rates, though they may be slightly lower than those of regular fixed deposits due to the added flexibility. | Generally, provides higher interest rates, reflecting the commitment to a fixed tenure without early access. |
| Investment flexibility | Provides the flexibility to adjust investment amounts and durations, accommodating varying financial needs. | Requires a fixed investment amount and tenure, with limited flexibility once the deposit is made. |
| Maturity | A fixed maturity periso is chosen at the time of deposit | Flexi maturity period may offer auto-renewal after maturity |
| Premature withdrawal | Permits partial withdrawals without penalties, enhancing accessibility to funds. | Premature withdrawals are allowed but typically incur interest penalties ranging from 0.50% to 1%. |
| Use as contingency fund | Suitable for serving as a contingency fund, allowing easy access to savings during emergencies without compromising on interest earnings. | Less ideal for emergency funds due to withdrawal penalties and fixed terms, making access to funds more restrictive. |
Also Read: Download your Fixed Deposit receipt
Conclusion
Flexi FD schemes are convenient options for those who wish to balance liquidity with high interest earnings. These safe investment options offer investors the perks of easy withdrawals and flexible investment tenures. This convenience and easy accessibility make flexi fixed deposits a preferred choice, even if they offer marginally lower interest rates than regular FDs.
That said, flexi FDs are better suited for investors with short-term goals. Investing in a corporate FD may be better if you want to create a larger corpus for the long term. With a Bajaj Finance FD, you can grow your funds at up to 7.75% p.a. You can also enjoy easy liquidity benefits with flexible tenures, customisable payout options, and easy premature withdrawals.
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