Accounts

2 in 1: Give me more!

You have already burnt your fingers in the Dalal Street boom of the early 90s. You have so risk averse that you the maxim – "Once bitten twice shy" has become your mantra. You earn enough to be able to save something at the end of every month. You would like to invest your savings in a place, which gives you the flexibility to access it at times of emergency and yet gives you handsome returns. However, you don’t know where to go. Your neighborhood bank only gives you 4.5% interest per annum on your savings account. If the money is put into a fixed deposit account it gets out of your reach for a certain length of time.

This is where the aptly named 2 in 1 or a ‘flexi’ account fits the bill. Available at many of the foreign and private banks, it amalgamates the features of a savings or a current account and a fixed deposit account. Let’s take a bird eye’s view of what a few banks have on offer.

Standard Chartered Bank

As soon as one opens a 2 in 1 account with the bank, the deposit starts earning a rate of interest higher than that for a plain savings account (which means a minimum of 7.75% for a period of 30 to 45 days). The minimum average balance on a quarterly basis should be Rs. 50,000 if linked with the savings account or Rs. 1,00,000 with the current account. This is the total average balance in the fixed deposit and the linked account over the quarter. With a cheque book and an ATM card part of the deal one can withdraw money, if need be, by breaking one’s deposit down to the last paise. The amount withdrawn will lose 1% of the interest rate applicable for the period while the rest of the deposit will continue to earn the higher rate of interest.

Deposits are renewed automatically and any subsequent deposit has to be in multiples of 10,000 for savings linked and Rs. 25,000 for current linked 2 in 1. Lest you are already impressed after reading all this and have decided to open a 2 in 1 account with the bank but find the nearest branch far away from your residence - don’t worry - just call the bank at your doorstep and do the needful.

Hong Kong and Shanghai Banking Corporation (HSBC)

The Savings Account brochure of HSBC shows a walkman with only one ear plug. This could be jarring to one’s years. However, the copy below says: "Get a complete Savings Account from HSBC". Going through the write up convinced one that the service is in tune with what a customer normally would desire for. With a quarterly average balance of Rs. 10,000 one can transfer the excess balance in one’s account to a fixed deposit to earn higher interest. For this a certain limit is preset.

The other features include -

One is eligible to withdraw cash, deposit cheques, transfer money and order statements from HSBC’s 65 number strong ATM network.

Interest will be credited four times in a year. Maximum cash withdrawal limit is Rs. 10,000 per day and this can be done from any of the 22 branches spread around seven cities in the country.

Routine expenditure by way of rent, school fees, loan installments can be paid on the account holder’s behalf by the bank.

The savings account holder gets a fee waiver if he/she takes a credit card and gets a 0.5% discount on the interest rates for car loans and overdraft against shares if the account is being maintained for six and three months respectively.

Demat services.

HSBC also has another product, which combines a fixed deposit and a savings account. Want a savings account for free!! Open a fixed deposit account with HSBC and get the benefits of both a savings and a fixed deposit account. If you go by what HSBC has to say, it’s the latest way and some say a smart way of doing things. They call it the SmartMoney Account. That’s because it’s different than any other fixed deposit. It is a fixed deposit with an overdraft facility. Withdraw upto 90% and continue to earn interest on 100% of your fixed deposit. However, all this does not come on a platter. Any withdrawal less than or equal to Rs. 0.2 mn will be charged at a rate of 2% plus interest tax over the deposit rate chargeable for the amount withdrawn and for the time that it remains withdrawn. If the amount is more than Rs. 0.2 mn then the bank’s prime lending rate plus the interest tax will be the interest charged. And what if you want to increase your withdrawal limit? Benign advice from the bank tells you to keep adding to your deposits as often as you wish.

Citibank N.A.

Citibank has two products, which let you to access your fixed deposit account any time you need it.

Multi-deposit combines the advantages of both a savings or a current account with a fixed deposit account. Money is hold in units of Rs. 1,000 and can be withdrawn without breaking the entire deposit. The balance continues to earn the original fixed deposit rate of interest.

In the Unfixed Deposit scheme one can get avail of an overdraft facility of up to 90% of the deposit amount.

Features :-

Dial-a-draft – One can give instructions to make a draft cheque drawn on 40 locations within 24 hours.

Cash/Cheque pickup from one’s residence or office.

One can order cash between Rs. 1,000 to Rs. 25,000 at one residence or office.

HDFC Bank

The bank offers a savings account in two options. The first option is just like any savings a/c with the conditions that a minimum average quarterly balance of Rs. 5,000 must always be maintained else Rs. 150 per quarter will be charged. The second option, known as the sweep-in account combines the feature of a fixed deposit and a savings account. With no minimum balance requirement, one has to keep a fixed deposit of Rs. 25,000 and when in need of cash can just transfer or ‘sweep’ in funds to the savings account. Here again non-maintenance will attract a penal charge of Rs. 150 per quarter. Deposits are held in units of Rs. 1, which gives one the flexibility to withdraw the exact amount needed without losing up on interest. One can even jump from option 1 to option 2. However, this will attract an account closure charge of Rs.100

Yet another product is the super saver account. This is similar to HSBC’s SmartMoney Account. With a minimum amount of Rs. 25,000 in a fixed deposit one can withdraw upto 75% of the deposit by paying 2% plus interest tax (for a limit of Rs. 0.2 mn) over the deposit rate only for the period one uses the money.

ICICI Bank

Auto Sweep
Here the account holder decides the minimum amount to be kept in his/her savings account. Any excess over it will automatically get transferred to the Quantum – fixed deposit account. For e.g., if one instructs the bank to keep Rs. 10,000 as the minimum balance. All money above Rs.10,000 will be transferred to the Quantum fixed deposit account giving one the advantage of a higher interest rates. The minimum period under this facility will be of 30 days.

Reverse Sweep
Former England captain Mike Gatting tried this shot once too often in the 1987 World Cup Cricket Final and ultimately threw away his wicket. Australia went on to win the Final. However, the account holder here can take a chance. If he/she has issued a cheque or wants to withdraw an amount which is higher than what is in his/her savings account, the bank will just break the fixed deposit account in units of Rs. 1,000 or in multiples thereof and transfer it in the savings account to meet the shortfall.

Auto Renewal
Under this facility when the fixed deposit a/c attains maturity, the bank will automatically renew the principal and accrued interest for a further period as stipulated by the a/c holder.

Global Trust Bank

MahaSavings Account is an account that offers a higher interest for the idle money in one’s savings account. All balances in excess of Rs. 20,000 in this account are automatically transferred to a fixed deposit on the 10th of every month. These deposits would be in multiples of Rs. 5,000 and for a period of 30 days.

In case of a shortfall in the savings account, the deposits are automatically broken in units of Rs. 1,000 and the cheque issued is honored. Unutilized deposits would be renewed again for a further period of 30 days. One can have more than one deposit linked to the same savings account. In this case, the deposits are utilized on a LIFO (Last-in-First-out) basis i.e. the last deposit will be broken first.

Flexi Unit Deposit

Flexi Unit Deposit, as the name indicates, has built in flexibility to help access one’s money when one needs it. For e.g., suppose a account holder has deposited Rs. 10,000 for a period of 2 years in a Flexi Unit Deposit. The deposit is immediately converted into 10 units of Rs. 1,000 each. Alongwith a Flexi Unit Deposit, a linked Savings Account is also opened. This account allows you to access the money in your Flexi Unit Deposit easily, with a cheque book or ATM card. The units are held in multiples of Rs. 1,000.

Times Bank

High returns! Free savings account! Free ATM card! Anywhere Banking! HomeBanking! So declares the brochure of Times Bank. The bank, like many others, also has a scheme linking a fixed deposit account with a savings account. This they call it the Times Convenience Deposit.

Features :- Investing in Times Convenience Deposit means that the entire amount is held in units of one rupee. So, if one ever needs money, one needs only to break the amount required. The rest of the amount continues to earn the original high rate of interest.

Times overdraft deposit :- Times Overdraft Deposit is a fixed deposit automatically linked to a free savings/current account (no minimum balance requirement) against which one can overdraw upto 75% and even 90% in exceptional situations.