ICICI Bank FD Xtra – All You Need to Know

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In the first week of February, ICICI Bank has launched India’s first and innovative fixed deposits called FD Xtra. Under this plan, there are various schemes which offer insurance plan, investment in mutual funds. This is one of its kind innovative product that is specially designed keeping the needs of the Indians. Let’s deep dive into the product and check whether ICICI Bank FD Xtra is beneficial to you or not?

As you may be aware that in the union budget 2019, the finance minister has increased TDS limit on interest earned from Rs. 10000 to Rs. 40000. Banks are taking the advantage of this change in TDS and promoting fixed deposits to their customers by giving higher interest rates on the fixed deposits.

ICICI bank also has launched the FD Xtra product to attract their retail customers for investing in fixed deposits.

What is ICICI Bank FD Xtra Term Deposit Scheme?

ICICI Bank FD Xtra is the innovative term deposit product launched by ICICI Bank to attract investors. Fixed deposits are the main stream product for Indians to invest their surplus money. We indians are obsessed with fixed deposits as its secure and you will get sure short returns on the money invested.

The FD Xtra is designed with three different variant which suits different needs of different people. You can invest in mutual funds SIP, term insurance plans, retirement planning and much more.

Nowadays, people are not satisfied with just conservative returns of the fixed deposits. They need something extra. People are ready to go one step ahead and take some risk if they are getting extra returns.

ICICI Bank FD Xtra comes in below 4 variants.

  • ICICI Bank FD Xtra – FD Life
  • ICICI Bank FD Xtra – FD Invest
  • ICICI Bank FD Xtra – FD Income
  • ICICI Bank FD Xtra – FD Card

ICICI Bank FD Xtra – FD Life

FD Life is the first variant which comes with Group Term Plan – life cover. The scheme offers capital security, return on investment (interest) and protection of life cover.

Features of the ICICI Bank FD Xtra – FD Life

  • The life cover will be available for the fixed deposits of Rs. 3 lakhs and more.
  • The tenure of the fixed deposits must be a minimum of 2 years
  • The life cover will be available for one year
  • The insurance policy will be issued to the customer once the fixed deposit is opened
  • The applicant must be of good health, otherwise, the life cover will not be issued
  • The life cover will start from the date of your fixed deposit date
  • Interest earned on the fixed deposit is subject to tax deduction at source (TDS)
  • Partial/Premature withdrawal of the FD is allowed. Under such circumstances, the life cover will be withdraw from the date of partial/premature withdrawal.

ICICI Bank FD Xtra – FD Invest

FD Invest is the second variant of the ICICI Bank FD Xtra scheme. This variant offers safety of fixed deposit and investment into mutual funds via SIP. Under this scheme, you will get monthly interest on the principal amount invested. This interest will then be invested into mutual funds via SIP to earn extra money on the amount you have earned.

This way it is giving you an option to earn extra money without investing any extra amount anywhere.

Features of the ICICI Bank FD Xtra – FD Invest

  • You need to invest the fixed deposit amount that would generate enough monthly interest so that the same can be invested into mutual fund SIP
  • Minimum fixed deposit amount would be Rs. 200000, though it may vary based on the applicable interest rates for the tenure you are investing
  • You can invest in FD Invest option for a tenure ranging from 1 year to 10 years
  • You will get the regular interest on your amount invested into FD invest option
  • You will have an option to choose the mutual fund scheme from a wide range of ICICI Prudential Mutual Fund schemes
  • You need to do a minimum of Rs. 1000 as SIP
  • Minimum tenure is 1 year
  • SIP frequency must be monthly as you are getting interest amount on a monthly basis
  • You must be an Indian resident in order to invest in FD Invest option
  • For investment, you need to have an active ICICI bank savings account
  • You can have a joint fixed deposit account, but mode of operation should be single

ICICI Bank FD Xtra – FD Income

This is the 3rd variant of the FD Xtra scheme. Under this scheme, a term deposit with the feature of cumulative fixed deposit in the investment phase and fixed deposit with monthly income in the payout phase.

Features of the ICICI Bank FD Xtra – FD Income

  • You can have a joint fixed deposit account, but the mode of operation should be single
  • Minimum deposit amount would be Rs. 1 lakh and then after in the multiples of Rs. 25000
  • The investment phase of a minimum of 24 months and in multiple of 1 month then after
  • During the investment phase, you need to open a cumulative fixed deposit account
  • On completion of the Investment deposit phase, the entire maturity proceeds (FD amount + interest), as applicable, will be invested in the Annuity Fixed Deposit for the Payout period.
  • Monthly Payouts will be credited to the Savings Account of the customer.
  • The interest rates will be as per the prevailing rates
  • Partial withdrawal will not be allowed
  • Premature closure of the fixed deposit is allowed with the applicable penalty
  • Your existing fixed deposits cannot be converted into this scheme

ICICI Bank FD Xtra – FD Card

ICICI Bank offers range of credit cards against the fixed deposits. You don’t need to show any income proof for availing credit card against fixed deposit.

Features of the ICICI Bank FD Xtra – FD Card

  • You need to have a minimum of Rs. 10000 as fixed deposit with a tenure of at least 6 months
  • Your FD will get auto-renew on the maturity
  • You have an option to open an FD account as a cumulative or interest payout
  • Customer will get free platinum credit card against the fixed deposit, to know about the platinum card click here
  • FD can be opened by resident Indians only
  • You will get the prevailing interest rates on the fixed deposit
  • Interest earned is subject to TDS

Should you invest into ICICI Bank FD Xtra – (FD Life – FD Invest – FD Income)

Let’s check one by one all the variant whether you should invest in to it or not?

FD Life – You will get a life cover for Rs. 3 lakhs against the fixed deposit of Rs. 3 lakhs for lock in period of 2 years. Do you think that Rs. 3 lakhs life cover is enough for your family in case something will happen to you? There is a specific product called term plan for life cover, wherein you will get coverage of 50 lakhs to 1 crore.

According to me, it’s a combo offer of fixed deposit with insurance. You should avoid this option and go for the pure term plan for life cover.

FD Invest – Your earned interest will be invested into ICICI mutual fund schemes. For that the minimum SIP amount is Rs. 1000/month. So in order to invest via SIP, you need to generate at least 1000 interest income from your fixed deposit. For this, you need to invest Rs. 2 lakhs for the 1-year minimum so that you will get around Rs. 15000 as interest which will then be invested into ICICI mutual funds.

Two things which I don’t like:

  • You need to invest minimum of Rs. 2 lakhs
  • You have only option to invest into ICICI mutual fund schemes

FD Income – This plan is suitable for the person nearing to their retirement and want to get fixed income after investment phase is over. I think you must have your employee provident fund for your retirement corpus. Why you want to invest in this plan where there is no extra benefit? In this plan, there is no principal amount which is let after the tenure is over.

Conclusion:

The product looks attractive at the first glance, but if you check it in detailed, you will find there are many flaws. The product is designed as a combo offer in which more than one product is sold to you.

There are many other similar and good options available in the market for investment. I personally, do not recommend to invest into ICICI Bank FD Xtra product under any of the four variant.

If you have different opinion, please share your views in the comment section.

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