Kotak Activmoney, what's the catch here

[theda]

The Kotak Activmoney features without premature withdrawal penalty seem really good but there is a catch here. It says to give 7% interest but the final interest is calculated based on number of days the FD was kept.

For example if you keep the FD for 180 days you will get 7% interest but if you withdraw the money between 46-90 days you will get only 3.5% interest.

In other banks like Indusind with premature withdrawal penalty you only loose 1% of original interest rate. For example if make a FD for 365 days with 7.5 % interest and break it after 90 days you will still get 6.5% interest.

So, it seem Kotak Activmoney has a much bigger premature withdrawal penalty.

 

[RkrRkr is verified member.]

Okay, for "question" type thread, it is "Best answer".

then for "what type of thread " we an mark as "solution"??

Nope...For question thread,You can mark solution and for rest others best answer is there.

 

[SSV]

Nope...For question thread,You can mark solution and for rest others best answer is there.

Got it now completely... Thanks for your time and explanation..

As this thread should be a question type...as the OP asked the question, can you change this as solution if possible..
Thanks again, for your time...
Now I will create thread properly and explain to the guys who is not aware of it...

 

[RkrRkr is verified member.]

Got it now completely... Thanks for your time and explanation..

As this thread should be a question type...as the OP asked the question, can you change this as solution if possible..
Thanks again, for your time...
Now I will create thread properly and explain to the guys who is not aware of it...

As of now its not possible.It lies with OP to select correct thread type while creating the thread.

 

[SSV]

As of now its not possible.It lies with OP to select correct thread type while creating the thread.

It seems even OP can't change thread type after it was already created , right??



ANother question in this case OP created the thread as "discussion" but he claims he can't see " Best Answer" button?? why so?

No I don't. There should should be button but I can't see it.

 

[RkrRkr is verified member.]

It seems even OP can't change thread type after it was already created , right??



ANother question in this case OP created the thread as "discussion" but he claims he can't see " Best Answer" button?? why so?

Its there.Do some brain stormings ?🤪🤪🤪

 

[Rishabh]

One catch with Kotak Activmoney is the interest is calculated based on Simple Interest not like normal FD which is compounded quarterly.
So say default rate at present for Kotak Activmoney is 7% pa and tenure is 180 days & if you book FD at other bank for same 7% and 180 days tenure if available, you will be getting higher interest amount on maturity in comparison to Kotak.

So annualized rate benefit not apply for Kotak Activmoney due to Simple Interest criteria.

 

[SSV]

Its there.Do some brain stormings ?🤪🤪🤪

Then probably he didn't look properly...
I can see for my threads.. as I said before..
Thanks

 

[Farhad sekh]

I am confused with the calculation

Please someone clarify, what will be the final rate of interest on kotak activemoney for 1 month duration?

 

[theda]

Then probably he didn't look properly...
I can see for my threads.. as I said before..
Thanks

No seriously I can't see it anywhere. Can you please send me a screenshot of where the best answer button.

 

[theda]

I am confused with the calculation

Please someone clarify, what will be the final rate of interest on kotak activemoney for 1 month duration?

As SSV said the rate will be calculate based on the number of days you kept the money in Activmoney without any penalty. As per this table for 30 days it will 3% per annum

 

[DaDarkkNight]

Kung fu @theda , panda @S S V didn't talk about any quarterly compounding. Don't mark him as solution yet

 

[palen]

Btw, there is a catch in activmoney. The threshold amount depends on your account variant and mab+5k * 2.

For example, 811 has 25k.

Classic savings account (10k mab) = 30k
Pro savings account (20k mab) = 50k
Ace savings account (50k mab) = 1.1L

So higher the mab your account hold, higher the threshold for activmoney moves higher.

I got to know this from branch manager today.

 

[Rishabh]

Btw, there is a catch in activmoney. The threshold amount depends on your account variant and mab+5k * 2.

For example, 811 has 25k.

Classic savings account (10k mab) = 30k
Pro savings account (20k mab) = 50k
Ace savings account (50k mab) = 1.1L

So higher the mab your account hold, higher the threshold for activmoney moves higher.

I got to know this from branch manager today.

For Ace it is 1lac, Privy Neon threshold 3lacs.

 

[hs23new]

Btw, there is a catch in activmoney. The threshold amount depends on your account variant and mab+5k * 2.

For example, 811 has 25k.

Classic savings account (10k mab) = 30k
Pro savings account (20k mab) = 50k
Ace savings account (50k mab) = 1.1L

So higher the mab your account hold, higher the threshold for activmoney moves higher.

I got to know this from branch manager today.

Lower threshold is is better correct? as there is not premature withdrawal fee. As long as FD is >45 days, you will earn same or more interest then saving balance.

 

[mj01]

How often is the money moved to FD? If my threshold is 50k and I deposit 1L tomorrow, will it be moved immediately?

Also does it automatically break the FD if I need to transfer/ withdraw more amount than in savings?

 

[Rishabh]

How often is the money moved to FD? If my threshold is 50k and I deposit 1L tomorrow, will it be moved immediately?

Also does it automatically break the FD if I need to transfer/ withdraw more amount than in savings?

FD gets created every midnight based on threshold & available balance.
And yes it auto debit from FD if amount withdrawn is higher than available.

 

[varundev]

I think main catch here is the threshold for sweep in and sweep out are same.

Lets say I have 25k in account, and 25k are sweep in and sweep out limits.

- day 1: salary of 25k comes - total 50k -> from that 25k go into active. Account: 25, Active 25
- day 30: I pay bills of 20k - account balance goes to 5k -> 20k come back from active. Account 25, Active 5,
- day 31: salary of 25k comes. Account 25k, Active 30k.

Normally between day 30 and 31, I would be fine with account balance of 5k, because I know my salary is about to come next day, but Active will break my fd of 30 days of 20k rupees to meet the sweep out limit. For these 20k, I will get only 30 days fd rate of 3%. And lets say I had to pay a bill in middle of month, I will only get 15 days fd rate and sometimes even less.

On the otherside savings will give me interest of 3-4% always. Basically I am losing on money I use for my regular transactions (recurring in period of 15 to 45 days based on balance). Only way to balance that out seems to be using credit card / alt bank account to store a buffer amount for regular bills and still get 3-4% interest.

Or I am missing something.

 

[ppac18]

I think main catch here is the threshold for sweep in and sweep out are same.

Lets say I have 25k in account, and 25k are sweep in and sweep out limits.

- day 1: salary of 25k comes - total 50k -> from that 25k go into active. Account: 25, Active 25
- day 30: I pay bills of 20k - account balance goes to 5k -> 20k come back from active. Account 25, Active 5,
- day 31: salary of 25k comes. Account 25k, Active 30k.

Normally between day 30 and 31, I would be fine with account balance of 5k, because I know my salary is about to come next day, but Active will break my fd of 30 days of 20k rupees to meet the sweep out limit. For these 20k, I will get only 30 days fd rate of 3%. And lets say I had to pay a bill in middle of month, I will only get 15 days fd rate and sometimes even less.

On the otherside savings will give me interest of 3-4% always. Basically I am losing on money I use for my regular transactions (recurring in period of 15 to 45 days based on balance). Only way to balance that out seems to be using credit card / alt bank account to store a buffer amount for regular bills and still get 3-4% interest.

Or I am missing something.

This is mostly correct. The catch is that you essentially need a "long tail" in your savings account balance for activmoney to work for you. Your account balance should be at least your threshold + your average typical monthly expenses + your excess funds. In this case, your excess funds will earn the extra interest, the threshold money will earn a little less than typical savings account interest, and the average monthly expenses will really not earn that much. The excess funds you maintain should be sufficient enough for you to cover the interest loss in your average monthly expenses. If you can't do that, then you might be much better served by creating FDs and manually linking them to your savings account.

There are some other issues with Activmoney as well. I have a Privy Neon account and I activated the feature last year. When I realized that the high threshold (3 L) didn't really work for me, I deactivated the feature on their app and created linked FDs. However, to my surprise, I found that their system was still breaking linked FDs to meet the 3 L threshold (even though their netbanking interface says that the threshold for breaking linked FDs is 0). I raised a service request with their customer care, visited a branch, and talked to the RM to get the issue resolved. Everyone said they had gotten it fixed at different points of time, but the system kept breaking linked FDs. After two weeks of following up, the issue still persisted, so I moved my funds to a different bank with a functioning sweep facility. My guess is that Activmoney is quite profitable for the bank, so disabling it on higher account variants is probably really tough. I'd recommend enabling it only if you have a lower account variant and maintain a decent excess balance (the excess will have to be less than the threshold of their next higher variant, since they'll be happy to bump you up and your threshold if they have the chance).

 

[shashank08]

Usually sweep FDs facilities like activmoney are more beneficial when you don't do lots of transactions from that account..
One example is keeping emergency fund in the account and activate activmoney.
Advantage - you dont take out that money and can maximize the interest while maintaining the liquidity.

 

[akilmds]

Hi all,
Can the SweepIn/SweepOut Activmoney FD be used for IPO applications under UPI mandates/ASBA?
If yes, will the FD only be broken upon IPO allotment, or will it break at the time of application?