![]() ![]() Working of an Auto-Sweep Account: In an Auto-Sweep account, you define the maximum amount you would want to hold in your Savings Bank account, which is the threshold limit. Your Savings Bank account is linked to a FD, and any amount lying in the Savings Bank account above a pre-defined threshold limit is automatically transferred to the FD account, helping you earn higher interest compared to the interest earned in Savings Bank account. This gives the twin advantages of both a Savings Bank account and a fixed deposit (FD) account. Meaning of Auto-Sweep Facility “Auto Sweep” facility is offered by many leading banks and is called by different names in different banks. This is where an Auto-Sweep facility in your Savings Bank account will help you. The extra cash lies idle in your bank account, earning a meager Savings Bank (SB) interest, just because you may be too busy to invest it or do not give much thought to it. However, you need to calculate whether taking the facility will enhance your finances or not.Most of us postpone investing our cash inflows in productive investment opportunities. If you make several withdrawals in a month, the auto sweepĪuto sweep is an easy and automatic way to earn a higher interest rate than your savings account. The facility is for people who make only a few withdrawalsĮvery month. ![]() Sweep in facility won’t be very beneficial to you. If there is less likelihood of having extra money, then a The auto sweep facility is helpful if you have extra cash in Hence, it is essential to know theĬharges before opting for auto sweep facility in your savings account. Also, someīanks may charge fees for this facility. Interest rate that is typically taken in regular fixed deposits. Rate on the FDs created through the sweep-in process instead of the compound Some banks may also give a simple interest There are also a few drawbacks of this facility. Drawbacks of auto sweep facilityĪlthough there are many benefits of auto sweep facility, ![]() Then the shortfall of Rs.15,000 (Rs.25,000 – Rs.10,000)will be auto reversedįrom your FD. After three months, if you withdraw Rs.10,000, Both the deposits will continue to earn different interest rates. In this case, the extra Rs.75,000 is transferred toĪ FD. Us assume that you have opened a savings account with an auto-sweep facility Let’s take an example to make it clearer to understand. Also, the previousįD that was created would need to remain fixed to give decent interest. The last in First Out method generates more returns as theįDs that were created earlier can continue to earn interest. In this method, the first FD is used to fund the savings account. The second method is called the First In First Out (Fifo) Predetermined limit, the last FD that was created is broken, and your savingsĪccount is credited. Here, if your balance in the savings account is less than the The first one is called the Last In First Out It will beīetter to ask your bank regarding the default tenure.īut how is your savings account funded in case your bankīalance runs lower than the set amount. However, the tenure of the FD will vary from bank to bank. ![]() The excess amount in your savings account is made into a one Even if your money is saved inĪ fixed deposit, you don’t have to worry about the liquidity. We know now that the excess amount is transferredĪutomatically to a fixed deposit and vice versa. On the other hand, when the amount in your savings accountįalls below the set limit, the shortfall in the savings account is catered byĪutomatically transferring money from your linked fixed deposit to your savings You can earn higher interest on the idle money remaining in your savings The threshold level is automatically invested in fixed deposits. Once you opt for the auto sweep facility, the amount above Typically, the limit can be anywhere between Rs.25,000 Savings account and fixed deposit are linked, and the customer defines a Savings account along with the higher interest rate of fixed deposit. The auto sweep facility has the best of both the worlds of It will provide us with a higher interest rate. We typically look at complicated products with the hope that Take care of the day to day expenses, the excess cash lying in your savingsĪccount can be put to better use by investing in ways that would give a higher While it is vital to have a certain sum of money to However, the money in the savingsĪccount is next to ideal. Savings account until the end of the month. It is a dream for many to have a sizeable amount of money in the Seeing a hefty sum of money in your bank can bring a smile Will suit individuals who have high balances and fewer transactions in a month. Facility comes with the best of both savings and fixed account. ![]()
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