Monday, August 18, 2008

Starting with Smart Savings: Money Multiplier Account

When I passed my college and joined job, I was a financial illiterate. All my savings used to lie in bank account and that’s it. Then I came across ‘Rich Dad and Poor Dad’. But once I finished reading the book, I realized that I am also one of the abundant species of “Financial Illiterates”.

I decided to change my breed, and from then started my regime of “Smart Savings”. I decided on my long term goals and decided that not only I’ll be saving regularly; I will also use those tools to save that will help grow my savings at rate > 10% annually. Why more than 10%, because banks will give you 10% returns. So if you spending some time on investments, then returns should be > 10%, otherwise I call it a failure.

When I started Smart Savings, basic problem I faced was deciding what all tools to use. There are so many instruments in the market to perplex you. But now after 2 years, I can list some tools for a fresher in the field that one can explore to start with:

Money Multiplier Account: Its one of the product of ICICI Bank, Corporation Bank of India. (I know about these two banks only. There can be other banks, may be you can consult your bank!) Money multiplier account is nothing but a Fixed Deposit (FD) Account. The only difference is that you don’t need any special request to break it in case you need that money. A Money Multiplier Account allows you to set a minimum balance to be maintained in your Savings Account. You can put in a request for the transfer of the excess of the minimum Savings Bank Account balance to Fixed Deposits. So you enjoy a higher effective rate of interest on your deposit.
Generally most of people will keep their 3 months expenses worth money in their bank accounts. They won’t use FD schemes for them, thinking that in case they need money before FDs mature, it will cause extra hassle. And moreover, I can’t use my money on the spot. What I mean by that let me explain:

Let’s say I want to buy some furniture. First I have to go to my bank to close that FD (or at least call them for same) one day prior of my shopping. Then if I didn’t get what I wanted to buy, I again have to go to the bank to create FD. That’s a pain. With money multiplier account, when you need the money you can withdraw it by issuing a cheque or through an ATM. Thus, you don't lose out on liquidity either!
The Money Multiplier feature gives you the liquidity of a Savings Account coupled with high earnings of a Fixed Deposit. It’s just like cash in your savings account, but will fetch you an interest of FD. It’s worth exploring and the best feature of my ICICI bank account. :)


  1. HI. i have a question. if i withdraw money prematurely from money multplier account will i get interest for the period it was in FD? say i apply for 1 yr money multplier fd and withdraw it in 8 months. will i get enhanced interst for 8 months?

  2. Refer to the penalty rates for premature closing :)

  3. Try SBI Savings Plus too. It has the same features and is much better in terms of deposit amount.

  4. As a financial planner, I totally understand where you're coming
    from. I read your site fairly often and I enjoy your posts.
    I shared this on twitter and my followers enjoyed it too.
    Kepp up the good work!