1. An unfixed deposit combines the features of liquidity of a savings bank account and higher returns of a fixed deposit. It is typically available for shorter periods ranging from a week to 180 days. The interest on unfixed deposits is taxed in a manner similar to that from FDs.
2. As in the case of a fixed deposit, the interest rate is specified at the time making the unfixed deposit. However, the customer can withdraw funds even during the tenure of the deposit without losing out on any interest.
3. However, under the scheme, banks specify a minimum period for which the funds need to be parked. Any withdrawal before the minimum period attracts zero interest on the deposit.
4. The interest is paid at the contracted rate till the date of withdrawal of funds. If a partial withdrawal is made, the balance continues to earn the interest at the specified rate.
5. The deposit can be used for parking funds for a short period of time and this is positioned against a liquid scheme of a mutual fund. Hence, it targets both individuals as well as institutions with different ticket sizes and interest rates.
2. As in the case of a fixed deposit, the interest rate is specified at the time making the unfixed deposit. However, the customer can withdraw funds even during the tenure of the deposit without losing out on any interest.
3. However, under the scheme, banks specify a minimum period for which the funds need to be parked. Any withdrawal before the minimum period attracts zero interest on the deposit.
4. The interest is paid at the contracted rate till the date of withdrawal of funds. If a partial withdrawal is made, the balance continues to earn the interest at the specified rate.
5. The deposit can be used for parking funds for a short period of time and this is positioned against a liquid scheme of a mutual fund. Hence, it targets both individuals as well as institutions with different ticket sizes and interest rates.
Content courtesy: Centre for Investment Education and Learning (CIEL)
Source:-The Economic Times
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