Question

You go to a bank for opening a saving account. The manager gives you a better option than saving account. In this account, the excess amount exceeding a certain limit, gets automatically transferred into the fixed deposit. The interest earned is more than saving account. This account serves the purpose of both the saving account and fixed deposit. Name the type of bank account penned and discussed.​

Answer 1

Answer:

If your saving account balance exceeds a given threshold limit (stipulated by you), the excess amount is automatically converted into a fixed deposit and it begins to earn the regular fixed deposit interest. In case you need the money back, the FD is liquidated automatically.

So basically, the facility tries to earn a higher rate of interest on Fixed deposits tied to the savings bank account and gives the ease of withdrawing money i.e. full liquidity.