Whats is Money Multiplier Fixed Deposit -Eligibility & Features

What is a Money Multiplier Fixed Deposit (FD)?

Innovative banking products frequently emerge when it comes to personal finance, offering enhanced benefits to investors. One such innovation is the Money Multiplier Fixed Deposit. While traditional Fixed Deposits (FDs) have long been a choice for conservative investors seeking safety and guaranteed returns, the Money Multiplier Fixed Deposit provides an exciting twist that can maximise your investment potential. In this blog, let us get to know what a Money Multiplier FD is, how it differs from a regular FD and why it might be an attractive option for investors.

Understanding Money Multiplier Fixed Deposit

The Money Multiplier Fixed Deposit maximises both liquidity and returns on your savings. This product gives you the combined benefits of a Savings Account and a Fixed Deposit and enables you to earn higher interest rates, with the ability to access your funds. The linked Savings Account provides liquidity and allows you to withdraw funds as per your need, without breaking the FD, with earnings at higher rates. Additionally, ICICI Bank offers sweep-in facilities, where excess funds from your Savings Account are swept into the Fixed Deposit.

Benefits of an ICICI Bank Money Multiplier Fixed Deposit

This is a versatile financial tool that helps you maximise your earnings while maintaining easy access to your funds. It offers several distinct advantages, which is why it is considered an interesting option to manage your finances effectively. Here are the primary benefits:

High Liquidity

One of the standout features of the Money Multiplier FD is the ease of access to your funds. When in need, you can withdraw money from your Savings Account using various channels such as ATMs, Internet Banking or Cheques. If the balance in your Savings Account drops below ₹10,000, the Bank automatically transfers funds from your linked FD in multiples of ₹5,000, to maintain the required balance.

Enhanced Returns

The Money Multiplier FD links your Savings Account to a Fixed Deposit, ensuring that your funds never remain idle. Surplus funds from your Savings Account are automatically used to open Fixed Deposits in multiples of ₹5,000, which earn a higher interest rate compared to regular savings deposits.

Convenient Auto-Renewal

To simplify investment management, ICICI Bank offers Auto-Renewal for Money Multiplier FDs, allowing your investment to grow without your intervention.

Eligibility Criteria for an ICICI Bank Money Multiplier FD

To apply for an ICICI Bank Money Multiplier FD, certain eligibility criteria and documentation are required. Below is a detailed overview of these requirements:

1. Resident Indian Savings Account

•  Applicants must hold a Resident Indian Savings Account with ICICI Bank
• A minimum average balance of ₹15,000 must be maintained in this Account. For Special Resident Savings Accounts, the minimum average balance requirement is ₹30,000.

2. Identity and Address Proof

• Valid identity proofs include:
  • Passport
  • Driving Licence issued by the Regional Transport Authority
  • Voter ID Card
  • Job Card issued by the National Rural Employment Guarantee Act (NREGA).

Note: PAN Cards issued in India are not accepted as a valid identity proof for this purpose

Valid address proofs include:

• Utility bills (electricity, telephone, postpaid mobile phone, piped gas, water) up to months old  Property Tax bills or Municipal Tax receipts from the previous year  For employees, a Letter of Allotment for accommodation from the employer or a Leave and Licence Agreement.

3. Fixed Deposit Opening

• Customers need to request for activation of the Money Multiplier feature through ICICI Bank’s Internet Banking platform, Customer Care or by visiting a branch
• FDs must be created in multiples of ₹5,000 and the minimum amount required to create a Money Multiplier FD is ₹10,000
• The default tenure for linked FDs is year unless the customer specifies a different period.

5 Key Factors to consider before choosing a Money Multiplier FD

A Money Multiplier FD can be a highly effective financial instrument, allowing you to earn better interest on your idle funds while maintaining liquidity. Before opting for a Money Multiplier FD, it is crucial to ensure that it aligns with your financial goals and circumstances. Here are key factors to consider:

1. Minimum Balance to be Maintained

Different banks set varying minimum balance requirements for Money Multiplier FDs. For instance, ICICI Bank requires maintaining a minimum average balance of ₹15,000 or ₹30,000 for Special Resident Savings Accounts.

2. Compare Interest Rates and Terms

Compare the FD Interest Rates offered on Money Multiplier FDs with those of other investment options. Additionally, review the tenure options available. ICICI Bank offers default tenures of year or more, which can be customised.

3. Understanding Auto-Renewal and Withdrawal Policies

Understanding the auto-renewal process for FDs is important. For instance, ICICI Bank automatically renews FDs at maturity, unless other instructions are provided. Additionally, be aware of any charges for premature withdrawals, in case you need to access those funds before the maturity date.

4. Identifying the Sweep-in Threshold and Sweep-out Frequency

Check the sweep-in threshold, which is the minimum amount required to trigger the fund transfer from your Savings Account to the FD. Different banks have different sweep-out frequencies, determining how often funds can be transferred back to the Savings Account when needed. ICICI Bank performs reverse sweeps in multiples of ₹5,000 when the balance falls below a specified amount.

5. Tax Considerations

Stay informed of Tax implications on the interest earned from a Money Multiplier FD. Interest earned is subject to taxation as per prevailing Income Tax laws. Consulting with a Tax Advisor can help understand the impact on your overall Tax liability and manage your investments more effectively.

Converting Money Multiplier FD to Standard FD

Money Multiplier FDs can be converted to Standard FDs through Internet Banking. Follow these steps: Login -> Service Request -> Deposit -> Closure/Renewal of FD -> Conversion of Linked FD to Standard FD.

Linked Balance

The available linked balance in the Savings Account consists of only the principal amount of the linked FD. Interest is credited on this amount for the reverse sweep transaction at EOD (end of day).

Wrapping up

Money Multiplier Fixed Deposits are a smart choice for those who want to make the most of their savings without sacrificing accessibility. By blending the benefits of a Savings Account with high-yielding FDs, ICICI Bank's Money Multiplier Fixed Deposit offers the balance of liquidity and returns. However, before opening one, it is essential to assess the essential factors thoroughly. With thoughtful consideration, this innovative financial tool can be a valuable addition to your financial strategy, helping you achieve goals with ease and confidence.