What Is a Flexi FD or Auto-Sweep Account?
A Flexi Fixed Deposit (also called an Auto-Sweep Account or Sweep-in FD) is a hybrid product that combines a savings account with an FD. Here is how it works:
- You set a threshold balance (e.g., ₹25,000) in your savings account.
- Any amount above the threshold is automatically swept into an FD, earning FD rates instead of the savings account rate.
- When you withdraw — via ATM, cheque, UPI, or NEFT — the bank breaks the FD in reverse-chronological order (Last-In, First-Out — LIFO) to fund the withdrawal. The broken FD portion earns FD interest up to the break date.
The result: your idle salary earns 6.45–7.25% (FD rate) instead of 2.70–4.00% (savings rate) without losing instant liquidity.
Why This Matters: The Cost of Idle Savings
Many salaried professionals in India keep ₹1–5 lakh in their salary savings account "just in case." At a typical savings rate of 3%, ₹5 lakh earns ₹15,000/year. At an auto-sweep rate of 7.25% (IDFC FIRST), the same balance earns ₹36,250/year — a difference of ₹21,250 per year on idle money, after doing nothing.
Bank-Wise Auto-Sweep Products Comparison
| Bank | Product Name | Minimum Threshold | FD Rate (1-year) | Minimum FD Sweep Size | Tenure |
|---|---|---|---|---|---|
| SBI | Multi Option Deposit (MOD) | ₹35,000 | 6.45% | ₹1,000 | 1–5 years |
| HDFC Bank | SweepIn FD | ₹25,000–₹75,000 (account type) | 7.20% | ₹25,000 | 6 months–5 years |
| ICICI Bank | Money Multiplier | ₹25,000 | 6.50% | ₹5,000 | 1–5 years |
| Axis Bank | Flexi-Fix Deposit | ₹25,000 | 6.45% | ₹5,000 | 6 months–5 years |
| Kotak Mahindra | Kotak ActivMoney | ₹10,000 | 6.80% | ₹5,000 | 6 months–10 years |
| IDFC FIRST Bank | FD MoneyMaximizer | ₹10,000 | 7.25% | ₹1,000 | 6 months–5 years |
How Withdrawal Works (LIFO Method)
When your savings balance drops below the threshold due to a transaction, the bank breaks the most recent FD (last in) first. Example:
- You have ₹30,000 in savings (threshold ₹25,000) and ₹2,00,000 swept into FD in 3 tranches: ₹80,000 (Jan), ₹70,000 (Feb), ₹50,000 (March).
- You withdraw ₹1,00,000 in April. Your savings goes to ₹0, so the bank breaks FDs from the most recent: ₹50,000 (March tranche broken first), then ₹50,000 from the February tranche to make up the rest.
- The remaining ₹20,000 February FD and ₹80,000 January FD continue earning FD interest.
Each broken tranche earns interest at the contracted FD rate up to the date of break, minus a small premature withdrawal penalty (typically 0.50–1.00%). For FDs broken within the same bank's stipulated rules, some banks waive the penalty on sweep-in FDs.
Is There a Premature Withdrawal Penalty on Auto-Sweep FDs?
This varies by bank:
- HDFC SweepIn: No premature withdrawal penalty on the swept portion if held for at least 12 months. For shorter periods, 1% penalty applies.
- SBI MOD: No premature withdrawal penalty for amounts over ₹1,000 broken in multiples of ₹1,000.
- ICICI Money Multiplier: 0.50% penalty below contracted rate for early break.
- IDFC FIRST: 1.00% penalty for premature break of swept FD.
Even with a penalty, the net rate earned on a short-duration FD break usually exceeds the savings account rate — so you're still ahead compared to never sweeping.
Tax Treatment of Auto-Sweep FD Interest
Interest earned on the swept portion is treated as FD interest and taxed at your income slab rate (20% or 30% for most). TDS at 10% applies if aggregate FD interest (including sweep-in FD) exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). File Form 15G/15H to avoid TDS if applicable. Read our guide on FD interest taxation and TDS rules.
Auto-Sweep vs a Regular FD: When to Use Which
| Scenario | Auto-Sweep FD | Regular FD |
|---|---|---|
| Money you may need any time | Better — instant access | Worse — premature penalty |
| Money you definitely won't need for 1–3 years | Slightly worse (LIFO breaks possible) | Better — higher net rate, no risk of partial break |
| Salary account idle balance | Ideal — automates earning | Inconvenient — manual transfers needed |
| Emergency fund | Ideal — keeps earning until needed | Poor — locked with penalty for withdrawal |
| Large one-time sum (>₹5 lakh) | Good for the liquid portion | Better for the locked portion |
How to Set Up Auto-Sweep at Your Bank
SBI (MOD): Visit branch and fill MOD form, or use YONO App under Savings Account > MOD. Set threshold and FD tenure. The bank automatically links your MOD account.
HDFC Bank: Net Banking > Accounts > SuperSaver Account / SweepIn FD. Configure the threshold and minimum sweep amount.
Kotak ActivMoney: Available via Net Banking or Kotak Mobile Banking app under Accounts > ActivMoney. Low threshold of ₹10,000 makes it accessible for smaller balances.
Use the FD calculator to estimate how much extra you'd earn on your average idle balance before setting this up.
Frequently Asked Questions
Can I set up auto-sweep on my existing savings account?
In most cases, yes — but you may need to visit a branch or complete a form, as not all banks allow activation through the app alone. SBI MOD, HDFC SweepIn, and Kotak ActivMoney can typically be set up via net banking or the bank's mobile app.
What is the minimum amount that gets swept into an FD?
This varies: SBI MOD sweeps in ₹1,000 units, HDFC Bank requires ₹25,000, ICICI and Axis ₹5,000, Kotak ₹5,000, and IDFC FIRST ₹1,000. Choose a bank whose minimum sweep size suits your idle balance patterns.
Does a sweep-in FD affect my savings account minimum balance requirement?
No. The threshold balance you set for auto-sweep is separate from the minimum balance requirement. Ensure your savings account maintains the minimum average balance as per the bank's terms, independent of the sweep threshold.
Is the interest on sweep FDs credited monthly or at maturity?
This depends on the product terms. Most auto-sweep FDs are cumulative (compounded and credited at maturity or on break). Some banks offer quarterly interest credit to the linked savings account — check your bank's specific terms when setting up.
What happens to the sweep FD if I close my savings account?
The sweep FD will typically be closed and the proceeds (principal + interest accrued to date) credited before the savings account is closed. If there is any outstanding loan against the account, the bank may adjust from the FD proceeds.
Can I have both a sweep-in FD and a separate regular FD at the same bank?
Yes. These are independent products. You can maintain a sweep-in FD for your liquid idle balance and a regular FD for longer-term locked savings. In fact, this is a sensible setup: sweep-in for 3–6 months' expenses, regular FD for surplus funds you don't need for 1–3 years.
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