What is a Flexi Recurring Deposit?

You must have heard of a recurring deposit, but did you know that you can also open a flexi recurring deposit account? Let’s understand what a flexi RD is.

Defining a Flexi RD

A ‘flexi recurring deposit’ is a more convenient savings instrument for people who do not have a similar income every month. There are two sections in a flexi RD -

• The core amount, which is deposited by the customer while opening the flexi RD

• The flexible amount, which can change based on the funds available to the customer

The core amount is deposited with a tenure in mind. The rate of interest will depend on this tenure, amount, and the bank’s interest rates for flexible recurring deposits. 

The variable amount is deposited every month, adding to the existing core amount in the account.  If the core amount is not deposited within the pre-determined date, a penalty will be charged by the bank.

Features of Flexi Recurring Deposit

After learning what is a flexi recurring deposit, let us look at its features and benefits -

• The amount to be deposited is not fixed in this type of recurring deposit

• When you have more funds available to you, you can deposit a higher amount than the core promised amount

• The flexible amount can be deposited at any date during the month and no penalty is charged even if you don’t deposit it

• It is great for entrepreneurs or any other professional who do not earn a fixed income every month

• There is a limit to the flexible amount set by the bank which cannot be exceeded by the customer

• The rate of interest is calculated on the core amount as per the rates of the bank

• The interest on the flexible amount is calculated from the date it is deposited

• Premature withdrawals and loan facilities are available just as in regular recurring deposit accounts

• Like other RD accounts, it can be auto-renewed at the end of the tenure

Flexi Recurring Deposit Interest Rates

Flexi RDs are a great investment tool given the liquidity and high returns they offer to customers. However, the tenures, rates of interest, and amounts vary depending on the bank you choose to open a flexi RD account. 

Here are some major banks and the basic features of their flexi RD accounts -

Note: Rates mentioned as of 11th March 2024, and can be revised by the bank without any notice. Please check with the bank before opening an account.

Flexi RD vs Regular RD

Both flexi RDs and regular recurring deposits are great investment tools for the flexibility they offer. But here are some differences between flexible recurring deposits and regular recurring deposits -

• You need to pay a fixed amount on a fixed date for a regular RD. However, in the case of a flexi RD, you can invest an amount up to twice the base amount. This variable amount can be deposited at any time of the month.

• Missing a payment for a regular RD may attract a penalty. If you do not pay the variable amount in a flexi RD, no penalty will be charged.

A flexi recurring deposit has many benefits over a regular RD. If you are an entrepreneur and have some extra funds during a particular month, a flexi RD gives you the freedom to invest it in the same RD that you have been maintaining.

However, you need to remember that in most cases, the promised rate of interest will be calculated on the base or core amount that you pay while opening the account. This is the amount you pay every month on a stipulated date. 

The interest on any extra variable amount that your deposit will be calculated from the day it was deposited. Thus, this comes with the possibility of investing the amount at any time of the month. 

The terms and conditions of flexi recurring deposits will vary depending on the bank that you choose.