How To Earn Fixed Deposits (FD)-Like Interest Rates From Savings Accounts: SBI Vs ICICI Bank Vs HDFC Bank

State Bank of India (SBI) account holders who want to earn maximum out of their SBI savings account can take succour in SBI savings plus account. SBI savings plus account allows customers to earn higher interest rates on the money that is lying idle in their savings bank accounts. The minimum amount that one requires in his/her SBI savings bank account is Rs 35,000 and beyond that a minimum of Rs 10,000 will be transferred to the multi-option deposit (MOD). In fact, private peers ICICI Bank and HDFC Bank also offer a similar savings account option.

The money is transferred in the multiples of Rs 1,000. For instance, if the SBI savings bank account has 46,300 then the amount that will be transferred to MOD will be 11,000 and not Rs 11,300 (Rs 46,300 - Rs 35,000) because the transfer has to happen in multiples of Rs 1,000.

State Bank of India (SBI) Savings Plus Account Features:

1. The minimum amount that is transferred to multi option deposit (MOD) is Rs 10,000 in multiples of Rs 1,000.

2. The minimum threshold limit for transfer to multi-option deposit (MOD) is Rs 35,000.

3. At the time of availing the facility, the customer must specify whether first in first out (FIFO) or last in first out (LIFO) principle should be applied for redeeming of deposits. In the absence of any mandate, the last in first out (LIFO) principle should be applied.

4. All the facilities like an ATM card, mobile banking, internet banking and SMS alerts - that are offered to savings bank account holders - are available in this account.

5. The monthly average requirement for SBI savings plus account in a metro centre is Rs 3,000, Rs 3,000 in urban, Rs 2,000 in semi-urban, and Rs 1,000 in rural areas. This balance will be maintained for which the reverse sweep will be triggered.

What is LIFO? LIFO means last in first out. When the customer's balance in savings bank account falls below the minimum account balance (MAB) then some of the money from the savings plus account is transferred to the savings account so as to maintain the minimum balance. While doing so, some of the fixed deposits are to be broken involuntarily. However, the bank will make sure that only the last term deposits are broken and not the first ones. This is good for customers since the last fixed deposits would have accrued the least interest in comparison to the earlier ones.

What is FIFO? This means first in first out. When the deposits are forcibly broken for shifting the money to SBI savings bank account then only those deposits are broken which were made in the beginning leaving the latter deposits intact.

HDFC Bank

The facility similar to State Bank of India's Savings Plus account in case of HDFC Bank is known as Sweep-in facility. Just as in SBI, the transfer of funds from your fixed deposits (FD) to savings account will trigger on last in first out (LIFO) basis.

HDFC Bank sweep-in account features:

1. HDFC sweep-in facility is available for resident individuals, Hindu undivided families (HUF), private and public limited companies, societies, trust.

2. In case HDFC fixed deposits (FD) are held for fewer than seven days, the bank will forfeit interest for the amount transferred.

ICICI Bank

The plan similar to SBI's savings plus account in case of ICICI Bank is known as ICICI Bank Money Multiplier plan.

ICICI Bank Money Multiplier Plan Features: 

1. Creation of a linked fixed deposit (FD) makes sure that a higher interest rate is accrued on savings bank deposits.

2. A customer can issue instructions through any channel such as the bank branch, ICICI Bank phone banking and ICICI Bank's internet banking for creation of fixed deposit (s) from the surplus funds in savings bank account (subject to a minimum of Rs 10,000).

3. The fixed deposits will be created in multiples of Rs 5,000 for tenure of one year or more as instructed.

4. In case of automatic reverse sweep in, all linked fixed deposits (FD) will be enabled for automatic reverse sweep in the multiples of Rs 5,000 on a last in first out (LIFO) basis.