Fixed deposits (FDs) are an all-time favourite product for investors to earn a fixed rate of return. But one of the drawbacks of the fixed deposit is that once you book the , you can’t withdraw a partial amount. For this, you have to break the FD and keep the full amount.
But there is one facility available that helps you withdraw and invest the amount in an FD based on your choice, and it is the sweep-in facility. So, let’s find out how this facility works, key benefits, and much more.
What is sweep-in FD?
A sweep-in facility is a feature that helps you earn better returns on excess funds lying idle in your savings or current account. Under this facility, any sum in your above a pre-set limit is automatically transferred into an FD, where it earns a higher interest rate than a regular savings account.
Whenever you need money for withdrawals or payments, the required amount is automatically moved back from the FD to your savings account.
This ensures easy access to funds while allowing your idle balance to generate higher returns, offering the combined benefits of liquidity and better interest earnings.
How does sweep-in FD work?
Suppose you start a sweep-in facility in your savings account with a threshold limit of ₹50,000. This means any amount above ₹50,000 will automatically move into an FD and provide you with a higher interest rate.
Let’s say your account balance becomes ₹1,20,000. Since the threshold is ₹50,000, the extra ₹70,000 is automatically transferred into a sweep-in FD.
Now you want to make a payment of ₹60,000. Your savings account has only ₹50,000 available, so there is a shortfall of ₹10,000. In this case, the bank automatically breaks a portion of the FD and transfers ₹10,000 back into your savings account to complete the transaction.
This way your extra money of ₹60,000 continues earning higher FD interest while still keeping the amount accessible whenever needed.
Key benefits of the sweep-in facility
Higher returns on idle money
An excess amount lying in your savings account automatically moves into an FD, allowing you to earn a higher as compared to a regular savings account.
Easy access to funds
You can still withdraw money whenever required, as the bank automatically transfers funds back from the FD if your savings account balance falls short.
Partial withdrawal from FDs
The facility helps with better money management without the need to break FDs, thereby combining liquidity and higher returns.
Avoid cheque bounce due to shortfall
This facility ensures that cheques, bill payments, and other debit transactions are processed smoothly, even if your savings or current account balance is low.
Difference between regular FD and sweep-in FD
Here are the differences between the regular and sweep-in FDs:
| Feature | Sweep-In Fixed Deposit | Regular Fixed Deposit |
| Withdrawal | Allows automatic partial withdrawals whenever funds are needed | Usually requires breaking the full FD for withdrawals |
| Interest earnings | Remaining balance continues earning FD interest | Interest earning stops on the withdrawn FD amount once broken |
| Link with savings account | Directly linked to a Savings or Current Account for easy transfers | Operates separately from the savings account |
| Suitability | People seeking both liquidity and higher returns on idle money | Investors comfortable locking funds for a fixed period |
A sweep-in FD offers the best of both worlds by combining the flexibility of a savings account with the higher interest earnings of an FD. However, the choice of opening a sweep-in FD totally depends on your financial needs, spending habits, and investment objectives.
Disclaimer: This is purely for educational/ informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.