Emergency Fund Account with High interest rate on SB & FD

[kjs]

Hello Members,

I am looking to open emergency fund account with high interest rate on saving account and FD.

I have shortlisted 3
- AU Small Fin
- RBL Bank
- IndusInd Bank.

Preference: 0 balance.

Note : I will keep adding all extra fund in this account every month and do FDs and some idle amount in account. I have
ICICI salary account 0 bal by default and
hdfc 0 bal which i use for investment & Credit card bill payment.
BOB for UPI Transactions.

Also there should be an option for auto Rewenal for FD'S.

I am open to suggestions if better options apart from mentioned above 3

 

[Zacobite]

Hello Members,

I am looking to open emergency fund account with high interest rate on saving account and FD.

I have shortlisted 3
- AU Small Fin
- RBL Bank
- IndusInd Bank.

Preference: 0 balance.

Note : I will keep adding all extra fund in this account every month and do FDs and some idle amount in FD. I have
ICICI salary account 0 bal by default and
hdfc 0 bal which i use for investment & Credit card bill payment.
BOB for UPI Transactions.

Also there should be an option for auto Rewenal for FD'S.

I am open to suggestions if better options apart from mentioned above 3

CRED MINT @ ~ 9% short term or account at IDFC FIRST

 

[kjs]

CRED MINT @ ~ 9% short term or account at IDFC FIRST

Cred mint is invite only and minimum 1L needs to be invested which i am not comfortable and IDFC first bank is minimum 10k bal..I already have icici sal account that provides benefits similar to idfc 10k account

 

[rajb3009]

Hi,
For Emergency Fund, one can keep the amount in various debt MF. returns would be in the range of 6-8%. Liquidity issue is there as one would receive fund on T+1 day. Hence a combination of MFs & FDs is a better choice.

 

[Zacobite]

Cred mint is invite only and minimum 1L needs to be invested which i am not comfortable and IDFC first bank is minimum 10k bal..I already have icici sal account that provides benefits similar to idfc 10k account

emergency fund will be 1L + i am assuming.. if lesser then 1-2 % post tax won't really be significant.. Cred mint for short term is ok.. but that is your call.. idfc savings and fd rates are higher than icici..

 

[kjs]

emergency fund will be 1L + i am assuming.. if lesser then 1-2 % post tax won't really be significant.. Cred mint for short term is ok.. but that is your call.. idfc savings and fd rates are higher than icici..

Yes but i cant close icici account as i had to open for home loan emi deduction. Thinking of IndusInd bank.. Emergency fund amount will increase slowly every month ..

 

[panchabhut]

Focus on small fin banks and give preference to the one having branch nearest to your home/office

 

[pandeyji]

Hello Members,

I am looking to open emergency fund account with high interest rate on saving account and FD.

I have shortlisted 3
- AU Small Fin
- RBL Bank
- IndusInd Bank.

Preference: 0 balance.

Note : I will keep adding all extra fund in this account every month and do FDs and some idle amount in account. I have
ICICI salary account 0 bal by default and
hdfc 0 bal which i use for investment & Credit card bill payment.
BOB for UPI Transactions.

Also there should be an option for auto Rewenal for FD'S.

I am open to suggestions if better options apart from mentioned above 3

Go with Bank FDs, don't take CRED mint for Emergency funds as it contains some risk. I would recommend IndusInd bank or IDFC, both have good rates for FD. Make sure you invest in FDs without lockin.

 

[BMR]

AU is good. On 1 lac deposit you get 5%

And AU debit card is rupay platinum, many offers they provide on Swiggy , electronics etc.

 

[gauravraj]

Hello Members,

I am looking to open emergency fund account with high interest rate on saving account and FD.

I have shortlisted 3
- AU Small Fin
- RBL Bank
- IndusInd Bank.

Preference: 0 balance.

Note : I will keep adding all extra fund in this account every month and do FDs and some idle amount in account. I have
ICICI salary account 0 bal by default and
hdfc 0 bal which i use for investment & Credit card bill payment.
BOB for UPI Transactions.

Also there should be an option for auto Rewenal for FD'S.

I am open to suggestions if better options apart from mentioned above 3

Take a look at Bandhan Bank's savings account interest rates.

 

[alphamagnus]

DBS is a good choice too!

 

[SamPtnk]

Go for proper banks like Induisnd

Ignore all small finance banks as of now
Chances of them failing is getting pretty high
Even if they are insured for 5L its not worth the hassle

 

[kjs]

Idfc is 10k mb account,i already have a sal account with ICICI so i dont think idfc will be worth atleast now....can you suggest me 20k or10 initial funding account..My preference is 0 balance..i can manage that 20k if in case it makes any difference..i Read smwhere the debit card is different..does it make sense to open this account for debit card considering that i have the following debit and credit cards.

Hdfc platinum debit - 0 charges & 0 bal
Icici salary account debit - 0 charges & 0 bal
Axis ace ,my zone
Amazon pay icici
Sbi cashback

Go for proper banks like Induisnd

Ignore all small finance banks as of now
Chances of them failing is getting pretty high
Even if they are insured for 5L its not worth the hassle

 

[ramirami]

My opinion:

Requirements:
1. Emergency funds must be easily accessible
2. Emergency funds must be "safe".

RBL Bank has higher rates perhaps because there was negative news about it in the recent past, so I am not sure it meets Requirement # 2 for a long term "deposit and forget about it" approach. See for example, this article.

IndusInd Bank has good rates but the quality and reliability of internet banking is quite low. I am not sure it meets Requirement # 1.
Same is the case with SBM Bank India (pathetic quality of internet banking, but high rates)

AU Small Finance Bank seems to have decent internet banking, but I am not sure it meets Requirement # 2. Also the number of branches is not that high, so even accessibility is not fantastic if we also consider physical branches.

My suggestion is to not chase returns for your emergency funds. Unluckily, and I wish that does not happen, but if there is an emergency in which you are the victim and are not able to perform financial transactions, the funds must be available easily. Go to the nearest branch of ICICI / HDFC / SBI / Axis and open the account there.

Axis is notorious for fees / deductions from account balance, but it also has this feature where if the FD tenure is more than 2 years, if you prematurely break FD after 15 months, no penalty is charged. That could be useful for this use. Axis rates are also usually higher than ICICI / HDFC / SBI.

ICICI, HDFC, SBI and also probably Axis also offer a facility of auto sweep-in and sweep-out where FD is automatically created if savings account balance crosses a threshold, and automatically broken (closed) if withdrawal / transfer of an amount higher than the savings account balance is performed. Very convenient for emergency use.

 

[kjs]

I already have account with hdfc & ICICI , recently closed AXIS sal account and converted ICICI to Sal. HDFC using for investments & credit card bill payments using Visa Platinum card.

Your points are indeed valid.

• ICICI does not have autopay rather it has Multiplier FD which I am not a big FAN of.
• HDFC Auto sweep starts after 1L.
• Axis was best in auto sweep any balance above 25k was autosweep.
• Need to check on Kotak Autosweep with 811 account.
• SBI need to check the Autosweep.

Also have an account with Union Bank & BOB. Union offers better interest rate compared to its peers. but not sure if basic saving balance account offer AutoSweep.

 

[ramirami]

I already have account with hdfc & ICICI , recently closed AXIS sal account and converted ICICI to Sal. HDFC using for investments & credit card bill payments using Visa Platinum card.

Your points are indeed valid.

• ICICI does not have autopay rather it has Multiplier FD which I am not a big FAN of.
• HDFC Auto sweep starts after 1L.
• Axis was best in auto sweep any balance above 25k was autosweep.
• Need to check on Kotak Autosweep with 811 account.
• SBI need to check the Autosweep.

Also have an account with Union Bank & BOB. Union offers better interest rate compared to its peers. but not sure if basic saving balance account offer AutoSweep.

SBI Savings Plus Account
and
SBI Multi Option Deposit


MOD = SBI terminology for FD which allows full or partial withdrawal at any time.

At SBI branches, if you ask for MOD linked account, by default they will set the MOD FD duration to 1 year which does not give good rates. Ask for 5Y duration. Or, open a normal savings account and create the MOD manually via internet banking. Also, keep each deposit (FD / MOD) below 5 lakh as they have lower penalty for premature withdrawal.

There is a difference between ICICI sweep and SBI MOD - ICICI recreates FDs when money is swept from FD to savings account - so FD interest rate at the time of withdrawal gets applied to the remaining FD amount (the part which has not been withdrawn), which is not very intuitive.

On the other hand, SBI MOD keeps the deposit at the original rate and just removes some money from it to the savings account. The interest rate of the amount that is not withdrawn remains unaffected.

 

[kjs]

SBI Savings Plus Account
and
SBI Multi Option Deposit


MOD = SBI terminology for FD which allows full or partial withdrawal at any time.

At SBI branches, if you ask for MOD linked account, by default they will set the MOD FD duration to 1 year which does not give good rates. Ask for 5Y duration. Or, open a normal savings account and create the MOD manually via internet banking. Also, keep each deposit (FD / MOD) below 5 lakh as they have lower penalty for premature withdrawal.

There is a difference between ICICI sweep and SBI MOD - ICICI recreates FDs when money is swept from FD to savings account - so FD interest rate at the time of withdrawal gets applied to the remaining FD amount (the part which has not been withdrawn), which is not very intuitive.

On the other hand, SBI MOD keeps the deposit at the original rate and just removes some money from it to the savings account. The interest rate of the amount that is not withdrawn remains unaffected.

Okay thank you for the update..this helps a lot..Do you know if Kotak Bank Active money works in the same way ? Or it creates fd for money over 20k for 6 months at available ROI ? currently kotak bank looks to give highest roi for 6 months as autosweep is set by default at 6 months ROI i think

 

[ramirami]

Kotak ActivMoney is interesting - there is no premature withdrawal penalty, and sweep from savings to FD occurs every day. The catch is that the duration is fixed at 180 days, so if you ever need to sweep from FD to account, the effective duration will necessarily be lower than 180 days. For 180 days, Kotak's rate today is 6.5% but or any lower duration, it is max 4.25%, which is quite a drop. I think Kotak calls it "no premature withdrawal penalty", but even without penalty, the rates for smaller duration are not very good.

I looked at Kotak, SBI, HDFC, Axis, ICICI again right now and Axis seems to be the best compromise overall. But if you want to avoid Axis, I think I'd choose SBI over Kotak.

If there is no emergency, SBI 2-3 year duration will give 7% compounded quarterly, or 5 year duration will give 6.5% compounded quarterly.
Kotak will give 6.5% compounded 6-monthly.
So winner is SBI.

If there is an emergency, Kotak will give max 4.25%.
SBI will give 2.5% if it happens within 5 days, 4% if within 179 days and 4.75% or higher if it happens any time later, going to 6.5% for 2-3 Y and then 6% for 5Y.
If you book a long duration deposit, say 5 years, you get better returns with SBI if the emergency happens any time after the first 6 months. So for 4.5 years, SBI returns are better, for the first 6 months, Kotak returns are better. I'd call it a win for SBI.

If you choose SBI, I think auto sweep from savings to FD (Savings Plus) could be avoided and manual creation of MOD at the best rates will be better.

I think we are almost at the end of the interest rate hike cycle and the rates will start decreasing in the near future. So, in my opinion, locking a good rate for a large duration, either now or in the next few months could give the best returns.

 

[kjs]

Kotak ActivMoney is interesting - there is no premature withdrawal penalty, and sweep from savings to FD occurs every day. The catch is that the duration is fixed at 180 days, so if you ever need to sweep from FD to account, the effective duration will necessarily be lower than 180 days. For 180 days, Kotak's rate today is 6.5% but or any lower duration, it is max 4.25%, which is quite a drop. I think Kotak calls it "no premature withdrawal penalty", but even without penalty, the rates for smaller duration are not very good.

I looked at Kotak, SBI, HDFC, Axis, ICICI again right now and Axis seems to be the best compromise overall. But if you want to avoid Axis, I think I'd choose SBI over Kotak.

If there is no emergency, SBI 2-3 year duration will give 7% compounded quarterly, or 5 year duration will give 6.5% compounded quarterly.
Kotak will give 6.5% compounded 6-monthly.
So winner is SBI.

If there is an emergency, Kotak will give max 4.25%.
SBI will give 2.5% if it happens within 5 days, 4% if within 179 days and 4.75% or higher if it happens any time later, going to 6.5% for 2-3 Y and then 6% for 5Y.
If you book a long duration deposit, say 5 years, you get better returns with SBI if the emergency happens any time after the first 6 months. So for 4.5 years, SBI returns are better, for the first 6 months, Kotak returns are better. I'd call it a win for SBI.

If you choose SBI, I think auto sweep from savings to FD (Savings Plus) could be avoided and manual creation of MOD at the best rates will be better.

I think we are almost at the end of the interest rate hike cycle and the rates will start decreasing in the near future. So, in my opinion, locking a good rate for a large duration, either now or in the next few months could give the best returns.

Yeah .. SBI is win - win for most of the situations. Kotak would be best as of current scenario considering that money stays idle for 6 Months to get the most benefit from it. Would prefer SBI. One thing I have seen with Auto sweep is use an account which does not have more credit & debit transactions to get the maximum benefits.. I would anyways use this account only for Auto Sweep where the idle money would be transferred. The interest rate seems to be peeked out may get 1 hike & that might be the last 1.

For FD I already have Union Bank.

 

[Infinite]

Between IDFC First and IndusInd SB interest (non FD) rate, IDFC First may be better as it credits interest every month