Types of term deposits

Recurring deposits is a good option for salaried customers as it encourages systematical savings and helps build financial discipline

In addition to plain vanilla fixed deposits, there are recurring deposits and flexi deposits. Let us look at their features.

Recurring deposits
Unlike a fixed deposit where you invest a lumpsum, in recurring deposits you can invest a fixed sum of money every month. It is a good option for salaried customers as it encourages systematical savings and helps build financial discipline. Other features like tenure, interest rates, overdraft (loan) facility and premature withdrawal penalty are the same as FDs.

Some banks allow you the option to invest different amounts of money every month, or more than one deposit in a month, depending on your surplus.  

Savings-cum-fixed deposit
These are also called flexi or sweep-in deposits. They combine the features of a savings account with a fixed deposit. The depositor has to fix a certain minimum amount to be maintained in the savings bank account. This has to be the minimum balance as stipulated by the bank. It can be higher if the depositor wishes depending on his requirements. Any surplus over and above this automatically gets converted into a FD and earns higher interest rate. Some banks allow this facility with current account as well.

Tax saver deposit
Investing in a tax-saver allows you tax exemption up to Rs 1.5 lakh, under Section 80CC. The minimum lock-in is for five years. Interest rates are the same as regular term deposits.