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Benefits of FD-Linked Savings Account
Posted on Friday, June 28th, 2024 | By IndusInd Bank
In the ever-evolving landscape of personal finance, finding innovative ways to manage and grow your savings is crucial. One such financial product that has gained popularity is the FD-linked savings account. This hybrid product combines the features of a fixed deposit (FD) with the flexibility of a savings account, offering a range of benefits that cater to both risk-averse and growth-oriented investors. Here are some key advantages of FD-linked savings accounts:
1. Higher Interest Rates
One of the primary benefits of an FD-linked savings account is the opportunity to earn higher interest rates compared to a regular savings account. Fixed deposits generally offer better interest rates, and by linking your savings account to an FD, you can take advantage of these enhanced returns. This allows your idle funds to generate more income over time, helping you build wealth more efficiently.
2. Flexibility and Liquidity
While fixed deposits typically lock in your funds for a specified period, an FD-linked savings account offers greater flexibility. You can access a portion of your funds whenever needed, maintaining the liquidity of a traditional savings account. This ensures that you have access to your money in case of emergencies or unexpected expenses without compromising the higher interest benefits.
3. Automatic Sweep-In Facility
FD-linked savings accounts often come with an automatic sweep-in facility. This means that any excess amount above a certain threshold in your savings account is automatically transferred to a fixed deposit, thereby earning higher interest. Conversely, if your savings account balance falls below a certain level, funds are automatically swept back from the FD, ensuring that you always have sufficient balance for day-to-day transactions.
4. Safety and Security
Fixed deposits are considered one of the safest investment options, as they are not subject to market fluctuations. By linking your savings account to an FD, you benefit from this safety, knowing that your money is secure and will grow at a guaranteed rate. This makes FD-linked savings accounts an ideal choice for conservative investors who prioritize capital preservation.
5. Tax Benefits
In some cases, FD-linked savings accounts can offer tax benefits. For instance, interest earned on fixed deposits for a tenure of five years or more may qualify for tax deductions under Section 80C of the Income Tax Act. This can further enhance the overall returns on your investment, making it a tax-efficient option for long-term savings.
6. Easy Management
Managing an FD-linked savings account is straightforward, as most banks provide online and mobile banking facilities. You can easily monitor your account, track interest earnings, and make withdrawals or deposits with just a few clicks. This convenience adds to the appeal of FD-linked savings accounts, making them a hassle-free way to manage your finances.
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Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
