Definition
Sweep-in Fixed Deposit
A sweep-in FD links a savings account to a fixed deposit so surplus funds auto-move to earn FD interest, and reverse-sweep back when the account needs money.
A sweep-in (auto-sweep) FD automatically transfers balance above a chosen threshold from your savings account into a fixed deposit, earning higher FD interest on idle money. When a withdrawal or payment exceeds the savings balance, funds 'reverse sweep' from the FD to cover it.
This gives you FD-like returns with savings-account liquidity, breaking only the needed portion of the FD (often last-in-first-out) so the rest keeps earning. There is no penalty on the untouched FD portion.
It suits those who keep large balances in savings and want better returns without locking funds, though FD interest is taxable and rates should be compared with other liquid options.
Related terms
- RBI Retail DirectRBI Retail Direct is a scheme that lets individual investors directly open an account with the RBI to buy and hold government securities without an intermediary.
- Corporate FDA corporate fixed deposit is a deposit with a company or NBFC offering a fixed interest rate, usually higher than bank FDs, but without bank-style deposit insurance.
- Demat AccountA demat account holds your shares and securities in electronic form, eliminating physical certificates and enabling seamless trading and settlement on stock exchanges.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.