HAVE you ever tried losing weight? Eating right and working out just to find out at the end of the month that you've lost a grand total of 300 grams! It's a little like putting money in your savings account. You religiously deposit money month on month just to find out that you've got practically nothing in terms of interest benefits all these years. (In today's world a paltry 3.5% is actually equal to nothing). Also read: Why idle money is a devil's delight!

Give your savings a boost. Banks such as ICICI Bank, Union Bank of India, Corporation Bank, Bank of Baroda to name a few, have introduced FLEXI DEPOSITS! These instruments act as savings cum fixed deposits interchangeably, to bring you a lot more in terms of higher interest as well as additional benefits.

Flexi-deposits are similar to savings accounts. The only difference is that on the basis of your regular cash needs, you could set a limit and instruct the bank to transfer the balance of your idle money to the term deposit. This will enable you to earn some extra bucks in the bargain.

For instance, let's say you have put in Rs 1,00,000 in a flexi account for a year. Out of this Rs 70,000 would automatically be transferred to a flexi deposit while Rs 30,000 would remain in the savings account. The flexi deposit will earn interest at 5% per annum giving you a cool Rs 3,500 on your idle money, while the savings account balance would earn at 3.5% giving you only Rs 1,050!

But what if you've miscalculated your requirement and you've issued a cheque of Rs 33,000 instead of the Rs 30,000 currently in your savings balance? The beauty of this account is that the cheque will not bounce. The excess of Rs 3,000 will be invoked from the flexi deposit. In such emergencies, imagine you having to break your fixed deposit wherein your banker would charge you 1% premature penalty. But with a flexi-deposit, there’s no such charge.

So it helps you both ways. Earning interest as well as providing you liquidity. Every bank offers different features in this product. While the minimum balance of Corporation bank is Rs 10,000, HDFC requires Rs 25,000 where all money in excess of Rs 5,000 is automatically transferred to the fixed deposit, enabling the customer to earn comparatively higher interest. But the downside is that the overdraft has a limit of 75%. This means depositors can withdraw only that much and no more and yes, the money should remain in the account for at least six months.

Photograph: Gautam Singh/Associated Press

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e-mail: Team Wealth

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