An overdraft is a type of short-term loan. It’s most commonly utilised by firms to bridge the gap between short-term cash flow problems and long-term cash flow problems. Salaried people can use it instead of breaking up their FDs if they just require money for a short period of time. Instead of dividing up your FD and losing interest on the entire amount, a depositor can request for an overdraft. This is very likely to be approved.
How Does Axis Bank 24×7 Overdraft against FD Work?
The Overdraft Against FD facility is available 24 hours a day, 7 days a week and covers up to 85 % of the FDs maintained with Axis Bank. The interest rate is 2% higher than the bank’s FD interest rate. Assume you have a Rs. 4 lakh fixed deposit with a maturity of 2 years. You obtain a 5.40% annual interest rate. You will have to pay 7.40% interest on your 24×7 Overdraft Against Fixed Deposit. The best aspect about an OD is that you will only pay interest on the actual amount used and for the duration of the usage. The remaining funds will continue to accrue interest.
The interest rate on a personal loan, on the other hand, would be higher than the rate on an overdraft facility. Furthermore, if you were to break your FD, you would forgo all of the interest that you may have earned because there is no way to withdraw or redeem the FD in part.
Difference Between an Overdraft against FD and a Personal Loan
- For persons who don’t have a credit history, OD against Fixed Deposit is an excellent option to get funds. Borrowers without a credit history or credit score may find it difficult to obtain a personal loan.
- Compared to a personal loan, the application and documentation process is substantially easier.
- ODs do not have an EMI system. Borrowers can repay whenever they want as long as the FD is active.
- As aforementioned, interest is only levied on the amount of OD used and the duration it was used.
- OD facilities, unlike personal loans, do not have prepayment penalties.
Features of Axis Bank 24X7 Overdraft against FD
|Loan Type||Secured Overdraft Against a Fixed Deposit|
|Eligibility||Axis bank FD account holderResident of IndiaTax Saving FD not eligible|
|Overdraft Amount||Minimum Amount- Rs 25,000|
Maximum Amount- No Limit
|Overdraft facility||85% of the Total FD Amount|
|Interest Rate||2% plus Applicable FD Interest rate|
|Processing Time||Apply online and get access to funds in just few seconds|
|Interest Charge||Interest is charged on the amount being utilised. If you are eligible to access funds of up to Rs 85,000 but you withdraw only Rs 50,000 then you will be charged interest only for Rs 50,000|
|Utilisation of the Overdraft Facility||The account holder must utilise the credit facility sanctioned only for the purpose sanctioned by the Bank. The proceedings of this facility shall not be used for relending, purchase of gold in any form including primary gold, gold bullion, gold jewelry, gold coins, units of gold Exchanged Traded Fund (ETF), units of gold Mutual Funds, acquisition of small savings instruments (including KVP & NSC) and any illegal or antisocial, Speculative activities or purposes linked to capital market activities.|
|Dues||The bank will debit the Saving Bank (“SB”) account to clear any dues in OD account and close the OD account|
|Default in Payment||In case of default or Credit Facility is not repaid on demand, the Bank may take all steps necessary to prematurely encase the Fixed / Term Deposit to itself or set-off or uplift the securities / Fixed or Term Deposits hereby offered or held at any time or transfer / assign or reassign the same considered to be reasonable by the Bank and appropriate the net amounts towards discharge of all liabilities in the account/s with the Bank at any of its branches.|
How to Apply for an Axis Bank 24X7 Overdraft against FD?
Use this facility to get funds online and instantly against your fixed deposit with Axis Bank, without breaking it before maturity. This prevents your savings from being liquidated while providing you with immediate access to funds as needed. It is available to both business and salaried Axis Bank clients with Fixed Deposits.
- Login to your internet banking account using your login credentials
- Go to ‘Apply Now’
- Select the option of ‘Loans’
- Select the option of ‘Loan Against Fixed Deposit’
- Now fill the application form
- Mention the details such as overdraft amount, tenure, FD against which overdraft facility is being opted, and so on.
- Read the terms and conditions carefully
- Click on ‘Submit’
Frequently Asked Questions
Yes, you can avail an Axis Bank 24X7 Overdraft against a fixed deposit
No, you cannot avail a loan or an overdraft facility against a tax-saving FD.
No. The Axis Bank 24X7 Overdraft against FD is a secured loan. The fixed deposit is the collateral for the loan or overdraft facility.
The interest rate on an overdraft facility is 2% higher than the applicable interest rate on the fixed deposit.
An overdraft facility against a fixed deposit is a better option to fund a financial emergency in comparison to a personal loan. A personal loan attracts a higher interest rate, requires a credit score, and an EMI system. An overdraft or a loan against FD implies a lower interest rate, ease of loan processing, and no additional loan charges.
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