How Can Gen Z Benefit From Fixed Deposits?

...

Picture this - you’ve set aside some money from your salary, freelance gig or a side hustle. You want it to grow, but you’re not ready to lock it away for years. After all, life moves fast, and you never know when you might need quick access to your cash.

This is where an age-old savings option meets a fresh, flexible approach. No longer just about “lock-ins” and “long waits,” it’s now designed to match the pace of modern financial needs. Whether it’s for sudden plans, surprise expenses or just the comfort of knowing your money is within reach, there’s a smarter way to make it work for you.

All it takes is rethinking how fixed deposits (FDs) fit into today’s fast-moving lifestyle.

Beneficial features of fixed deposits that Gen Z must know

Gone are the days when fixed deposits meant locking up your money for years. Today, FDs offer a mix of security, growth and flexibility that fits the need for convenience and quick access. Here are some key features that make modern FDs a smart choice.

Auto-sweep facility

The auto-sweep facility blends the benefits of a savings account with the higher returns of a fixed deposit. When your savings account balance crosses a set limit, the surplus is automatically moved into an FD, where it earns better interest. If you need funds, the money is “swept” back into your account without penalties or paperwork.

This feature ensures your funds are never idle, helping you earn more on excess balances. It’s especially useful for Gen Z, as it offers hassle-free growth while maintaining liquidity, perfect for those who want to see their money work harder without giving up control.

Shorter period

Gone are the days of long FD lock-ins. Today, you can open a fixed deposit for as short as 7 days. This feature is ideal for Gen Z, who often have short-term financial goals like saving for a gadget or a vacation.

Instead of letting cash sit idle in a savings account, a short-term FD offers higher returns for a brief commitment. You stay in control of your money and can withdraw it at the end of the period without penalties. It’s a simple way to boost your savings without locking your funds for years, giving you the best of both worlds.

Also Read: Complete Guide on Fixed Deposit (FD)

Liquidity

Unlike old-school FDs that required “breaking” the deposit, modern FDs offer better liquidity. You can now make partial withdrawals without disturbing the rest of the deposit. If you have an FD worth ₹1,00,000 and need ₹20,000, you can withdraw only that amount while the remaining ₹80,000 continues to earn interest.

This option is ideal for Gen Z, who value flexibility and quick access to funds. You no longer have to worry about penalties for early withdrawals, making it easier to handle sudden expenses without losing out on returns. It’s like having a savings account that pays you more interest.

Reserve funds for short-term goals

Short-term financial goals like buying a phone, upgrading your laptop or planning a trip require smart planning. Instead of letting that money sit idle in a savings account, you can park it in a short-term FD. These FDs offer better returns than a regular savings account and keep your funds safe.

With tenures as short as a few weeks to a few months, you can time your savings with your goals. This approach encourages disciplined savings, ensuring you don’t spend the money prematurely. It’s a smart way to earn higher returns while staying on track to achieve your personal goals.

Get a loan/credit card against FD

Need emergency cash but don’t want to break your FD? Modern FDs allow you to use them as collateral for loans or credit cards. Instead of taking a costly personal loan, you get access to funds at a much lower interest rate. The best part? Your FD stays intact and continues earning interest.

For Gen Z, this is a smart safety net - you can handle emergencies without disrupting your long-term savings. If you have an FD of ₹3,00,000, you can easily get a loan or credit line of up to 90% of that amount, keeping your financial growth on track.

Grow Your Money Without Any Hassle with Kotak811 ActivMoney

With the Kotak811 app, managing your savings has never been simpler. ActivMoney lets you earn up to 7% p.a. on your idle funds while keeping them accessible. No need for large deposits, start with small amounts and pick shorter tenures that suit your needs.

It’s perfect for short-term goals like gadgets, travel or emergency funds. Kotak811 App app makes it easy to track, withdraw or set up multiple FDs in just a few taps. This ensures your money stays flexible, earns better returns and remains within reach.

Popular Searches on Kotak811

This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.