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How Does FD Linking On Savings Account Work?


by Mahindra Finance


May 23, 2024


5 mins read


Are you looking for a smart way to make your money work harder? Linking your fixed deposit (FD) to your savings account might be the solution you need. This unique offering not only helps you maximise returns on your idle savings but also offers the convenience of a savings account. 

In this article, we will explore why you should consider linking your FD with your savings account, how it works, and the benefits it offers. We will also provide a step-by-step guide on how to open an FD linked savings account online.

Linking your FD to your savings account can prove to be a crucial financial move for several reasons:

  • Higher Returns: By linking your FD with your saving account, you can earn more than standard interest rates offered by traditional saving accounts.
  • Simplified Financial Management: Having both your FD and saving account linked allows you to take advantage of the auto sweep-in feature. This feature automatically transfers excess funds from your savings account into an FD, ensuring that your money is working for you even when it's not actively being used. 
  • Safety Net for Savings: A linked FD acts as a safety net for your savings account by offering guaranteed returns without any effect due to market performance.
  • Disciplined Savings: Linking your FD to your saving account can also help you develop disciplined saving habits.

Advantages of Linking Your FD to a Savings Account

By linking your FD to a savings account, you can enjoy several advantages:

  • Higher Interest Rates: A primary benefit of linking your fixed deposit to a saving account is the attractive FD rates offered. 
  • Financial Discipline: The integration of both accounts promotes financial discipline by making it slightly more challenging to access your savings. This discourages impulsive spending and encourages consistent saving habits.
  • Convenience: Managing both your FD and savings accounts becomes much easier with online banking platforms. You can conveniently monitor and track all your funds, allowing for better financial planning and decision-making.
  • Safety Net: Your linked FD acts as a safety net by providing financial security in times of need. It offers quick access to backup funds when your account balance runs low, helping you avoid overdraft charges or any other unexpected expenses.

How Does FD Linking On Savings Account Work?

Now that we understand the benefits of linking an FD to a saving account, let's dive into how this unique offering actually works:

Opening an FD linked savings account: 

To open an FD-linked savings account, follow these simple steps:

  • Identify a trusted bank or financial institution that offers this service. 
  • Visit the bank's website and navigate to the section for opening a new account. Look for options related to FD-linked saving accounts.
  • Fill in the required personal and financial details as per the application form.
  • Upload the necessary documents for verification, such as proof of identity, address, and income.
  • Complete the video KYC process as prompted by the bank's website or mobile app.
  • Once your application is approved, you will receive your account details and can start using your FD-linked saving account immediately.

How FD Linking Works

When you link your FD to your saving account, a certain amount of money from your savings balance is automatically transferred into an FD. This amount is known as the "linked FD balance." The remaining funds in your savings account continue to earn interest at the regular saving account rate.

Interest Calculation

The interest on your linked FD balance is calculated based on the prevailing FD rates offered by the bank. These rates may vary depending on factors such as tenure and the amount of investment. Using an FD interest rate calculator can help you determine the potential returns on your investment. It's important to compare FD rates across different banks before finalizing an investment.


In case you need funds from your savings account, you can withdraw them without breaking the linked FD. Only the balance above the linked FD balance is available for withdrawal without affecting the fixed deposit.


Linking your FD to your savings account is a smart way to maximise your returns while maintaining liquidity and financial discipline. 

By taking advantage of higher interest rates, simplified financial management, and convenient access to funds, you can achieve your financial goals with ease. 

Consider opening an FD linked savings account with Mahindra Finance or a trusted bank today and enjoy the benefits of smarter banking.


1) What happens if I need to withdraw funds from my linked fixed deposit?

You can withdraw funds from your savings account without breaking the linked fixed deposit. Only the balance above the linked FD balance is available for withdrawal without affecting the fixed deposit.

Yes, you can link multiple FDs to your savings account. Each linked FD will have its own interest rate and tenure.

3) Are there any charges for opening an FD linked savings account?

Charges may vary depending on the bank or financial institution. 

4) Can I close my linked FD before its tenure ends?

Yes, you can close your linked FD before its tenure ends. However, there may be penalties or charges associated with early closure.

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