Have you ever wondered if you could earn Fixed Deposit (FD) interest rates while still enjoying the flexibility of a savings account? Well, you’re not alone! Surprisingly, most people are unaware that some banks now offer a feature that allows your savings account to work smarter — earning FD-like interest rates without locking away your money.
In this article, we’ll break down how you can earn FD interest on your savings account, who offers it, how it works, and why it’s a game-changer for everyday savers and professionals alike. Whether you’re a student, a working professional, or managing household finances, this guide will make sure you don’t miss out on extra earnings.
Get Interest on FD on Savings Account
| Feature/Detail | Description |
|---|---|
| Product Name | Flexi Fixed Deposit / Auto-Sweep Account |
| Interest Rates (March 2025) | Savings Account: 2.70% – 3.50% p.a. FD: Up to 7.85% p.a. (varies by bank & tenure) |
| Top Banks Offering This Feature | SBI, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank |
| Minimum Balance Requirement | Varies by bank, typically ₹25,000 to ₹1,00,000 |
| Liquidity Benefit | Money auto-sweeps into FD when surplus; withdrawn back when needed |
| Tax Implications | FD interest is taxable as per income tax slab. TDS applies if interest exceeds ₹40,000 (₹50,000 for seniors) |
In today’s dynamic financial landscape, earning FD interest on your savings account is a simple, smart way to grow your money without giving up flexibility. Yet, most people remain unaware of this facility, leaving potential earnings on the table.
With top banks offering Flexi Fixed Deposit or Auto-Sweep features, you can effortlessly combine the best of both worlds — liquidity and higher returns. Whether you’re planning for the short-term or thinking long-term, leveraging this feature can significantly optimize your savings strategy.
What Exactly is FD Interest on Savings Account?
Banks in India traditionally offer lower interest rates (around 2.70% to 3.50% per annum) on Savings Accounts, while Fixed Deposits (FDs) offer much higher rates — often between 6.00% to 7.85% per annum, depending on the tenure and the bank.
But here’s the catch — to earn FD interest, you’d typically have to lock your money in an FD for a fixed period, limiting easy access to your funds. This is where “Flexi Fixed Deposit” or “Auto-Sweep” comes in!
With Flexi FDs, banks allow your savings account to automatically shift surplus money (above a specified limit) into an FD. So, while you enjoy the liquidity of your savings account, the excess funds quietly earn FD rates.
How Does It Work?
Let’s simplify it:
- Minimum Balance Threshold: You set a limit (say ₹50,000) in your savings account.
- Sweep-In: Any amount above ₹50,000 automatically moves into a Fixed Deposit.
- Higher Interest: That surplus earns FD interest.
- Sweep-Out: If your savings balance drops below ₹50,000, the required amount is moved back from the FD — no manual intervention needed!
Example:
Ravi maintains ₹75,000 in his savings account, which has a threshold of ₹50,000. The extra ₹25,000 is auto-swept into an FD, earning 7.25% interest p.a., instead of the mere 3% from a standard savings account.
see also: LIC FD Gives 16% Guaranteed Return Know the Right Way to Invest
Benefits of Earning FD Interest on Savings Account
1. Higher Returns Without Sacrificing Liquidity
You don’t have to choose between liquidity and returns. Your money stays accessible, but surplus funds work harder.
2. Convenience
No need to manually create FDs or break them when needed. Banks automate it all.
3. Perfect for Salaried Individuals and Professionals
If you receive regular inflows (like salaries or business income) but don’t always need all the money at once, your idle cash earns better returns.
Top Banks Offering Flexi Fixed Deposit (As of March 2025)
| Bank Name | Savings Interest Rate | FD Interest Rate (General) | FD Interest Rate (Senior Citizens) |
|---|---|---|---|
| HDFC Bank | 3.00% p.a. | Up to 7.35% p.a. | Up to 7.85% p.a. |
| ICICI Bank | 3.00% p.a. | Up to 7.25% p.a. | Up to 7.85% p.a. |
| SBI | 2.70% p.a. | Up to 7.10% p.a. | Up to 7.60% p.a. |
| Axis Bank | 3.50% p.a. | Up to 7.50% p.a. | Up to 8.00% p.a. |
| Kotak Mahindra Bank | 3.50% p.a. | Up to 7.25% p.a. | Up to 7.75% p.a. |
Note: Interest rates are subject to change. Please refer to official websites for the latest updates.
Who Should Consider Opting for This Facility?
- Salaried Employees: Automate surplus salary savings for better returns.
- Small Business Owners: Idle business funds get better interest.
- Retired Individuals: Combine liquidity with FD benefits.
- Students/Parents: Pocket money or tuition funds can grow more over time.
Things to Watch Out For
1. Minimum Balance Requirements
Some banks require you to maintain balances of ₹25,000 to ₹1,00,000 to enable the auto-sweep feature.
2. Premature Withdrawal Penalties
Though flexible, withdrawing FDs early might slightly reduce the interest earned or incur minor penalties.
3. Tax Implications
FD interest is fully taxable. TDS (Tax Deducted at Source) applies if interest exceeds ₹40,000 (₹50,000 for senior citizens) annually.
How to Activate FD Interest on Savings Account?
Steps:
- Visit Your Bank Branch or Net Banking: Log in or visit in person.
- Opt for Flexi Deposit/Auto-Sweep Facility: Many banks list it under account features.
- Set Threshold Limit: Decide the balance above which surplus funds will move to FD.
- Choose Tenure: Typically ranges from 6 months to 1 year; often auto-renewable.
- Monitor Statements: Keep an eye on balances and FD creation in your account statements.
see also: SBI Bank is Giving Tremendous Interest on 444 Days Fixed Deposit
Get Interest on FD on Savings Account FAQs
1. Is Flexi Fixed Deposit better than a normal FD?
It depends! If you value liquidity, Flexi FDs are ideal. But if you can lock away funds without needing access, a normal FD may offer slightly better interest.
2. Are there charges for enabling the sweep-in facility?
Generally, no additional charges. However, check with your bank for any minimum balance fees.
3. Can I break the FD anytime without penalties?
Yes, you can. But premature breaking may result in a slightly lower interest rate or nominal penalty.
4. Do all banks in India offer this feature?
No, only selected private and public banks offer Auto-Sweep/Flexi FD. Check with your bank.
5. Is FD interest on savings account taxable?
Yes, it is taxable as per your income slab, and TDS applies if interest crosses ₹40,000 (₹50,000 for seniors).
