Continuing further from part I of this Flexi Deposits / Auto Sweep Fixed Deposits: A Good Banking Service here are details of conditions and restrictions in such scheme:
How is the Flexi Deposits / Auto Sweep Fixed Deposits different from normal Fixed Deposits?
One of the main benefit of "Auto Sweep Fixed Deposit Scheme" or Flexi Deposits is that they are "flexible". The FD will get created automatically once the amount crosses the threshold level, and the Fixed deposit will get automatically broken when you withdraw your money anytime.
In the anobe example of 100,000 with Flexi deposit, suppose you needed 55,000 after 2 months. You can withdraw that amount by writing a simple cheque or through ATM without any problems. Your Flexi-Fixed deposit will be automatically broken.
What interest is paid to me when I break my Flexi Deposits / Auto Sweep Fixed Deposits mid way
Say from above example, if you break your Auto sweep FD in 3 months when you made it for 1 year. Then, most banks offer the interest rates available for the period of FD. In this case, if the bank was having interest rate for 3 months as 6%, then it will apply 6% of interest on the amount of money withdrawn.
Conditions & Restrictions of Flexi Deposits / Auto Sweep Fixed Deposits
One more benefit is that Fixed Deposit is broken only for the amount of money withdrawn (or multiple specified by the bank).In above example, yout total saving amount is 100,000 out of which 75,000 is in flexi FD and you withdraw 55,000. Remaining amount will be 45,000. So require threshold of 25,000 will still be available in savings account. FD will be broken for 55,000 and rest 20,000 will continue to remain in flexi-fixed-deposit.
This kind of benefit is not available in conventional FD, where you will be forced to break the FD for entire amount.
Continue onto Auto Sweep: Example of Axis & HDFC Bank Comparison
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