Rainy days can occur unexpectedly, bringing a lot of challenges and financial burdens. Whether it's a sudden medical emergency, urgent car repair, or a temporary loss of income, having a safety net is crucial to deal with situations when money might unexpectedly be needed. This is where savings accounts play a pivotal role.

The benefits of savings accounts are not limited to offering a secure place to accumulate your hard-earned money. Today, they have evolved to offer more advanced features to help you optimise your savings. One such innovative feature is Kotak’s ActivMoney facility, which empowers you to set aside funds for rainy days effectively while maximising your savings potential.

The ActivMoney facility is an auto sweep-in sweep-out facility, which automatically converts any surplus amount in your savings account beyond your predefined threshold limit into a Fixed Deposit (FD), allowing you to earn higher interest while keeping your funds always accessible. It is like having the best of both worlds: the flexibility of a savings account and the potential for higher returns like a fixed deposit.

Discussed below are the benefits of Kotak ActivMoney Savings Account and the ways you can use it effectively to prepare for rainy days and protect your financial well-being.

Tip 1: Capitalise on extra income

The default threshold for your ActivMoney savings account is Rs 25,000. This limit determines the amount of excess funds that will be automatically converted into fixed deposits with a tenure of 180 days and in multiples of Rs 5,000.

Thus, whenever you receive bonuses, tax refunds, or monetary gifts, channel these additional funds into your savings account. ActivMoney will seamlessly convert the excess into an FD, enabling your money to grow and work more efficiently for your future needs.

Tip 2: Maintain a budget

Creating and sticking to a budget is a fundamental aspect of managing your finances effectively. Take the time to analyse your expenses and identify areas where you can reduce costs. By tracking your spending habits, you will be able to pinpoint opportunities for saving more. For example, you can consider cutting back on discretionary expenses like dining out every day or subscriptions that you rarely use and redirect those funds towards your ActivMoney Savings Account.

This disciplined approach to budgeting will help you increase your savings and ensure that you have a sufficient rainy-day fund for unexpected financial challenges.

Tip 3: Regular monitoring and adjustments

Closely monitor your finances to adjust your saving strategies accordingly. For instance, suppose you notice an increase in your monthly income due to a raise or a new side project. You can allocate a higher portion of the surplus towards your account and take advantage of the higher interest rates through the savings account auto-sweep facility. This way, you can effectively build a financial safety net for unforeseen circumstances.

Take advantage of penalty-free withdrawals

So, these were some tips for using Kotak ActivMoney Savings Account to set aside funds for rainy days. The best part is that there are no penalties or fines on premature withdrawals from fixed deposits created through this facility. This feature allows you to access your funds without incurring any additional costs, ensuring you have the flexibility to deal with unforeseen expenses.

You don’t have to open a savings account separately for this facility. Existing Kotak customers can activate this facility online through Kotak’s mobile banking app or by visiting the nearest branch. So don't rely on regular savings rates anymore and enjoy FD-like interest on your account balance through the ActivMoney facility.

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Disclaimer: 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. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the 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. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.