Opt for the sweep-in facility and enjoy the benefits of high FD returns and liquidity of a bank account.
The auto sweep-in facility is a banking feature that allows you to link your savings or current accounts with FDs to optimise interest earnings while maintaining liquidity. This facility automatically transfers excess funds from your bank account to a fixed deposit when the account balance exceeds a predetermined threshold.
In case the bank account balance falls below the minimum requirement, funds are transferred back from the FD. This way, you can manage your short-term fund requirements with ease while earning returns on surplus funds.
Here is an example to help you understand the auto sweep-in facility better. Say you opt for the sweep-in facility and the minimum balance requirement is ₹50,000. Assume you have ₹40,000 in the account and have just deposited ₹20,000. This means, your total balance is now ₹60,000.
In this case, the bank will automatically transfer the excess ₹10,000 to your sweep-in fixed deposit account. This amount will earn interest as per the set FD rate.
To meet your short-term requirements, you can also withdraw this excess amount from the FD account whenever needed. You will not incur any extra charges or penalties for this facility.
Here are some steps you may have to take to apply for a sweep-in FD:
Log in to your net banking account
Look for an FD Sweep-in option
Choose the savings or current account and fixed deposit account number that you plan to link to this facility
Select the option to activate the sweep-in facility on your fixed deposit account after completing any additional steps required by the bank
Note: The aforementioned steps are generic and the actual process may differ from one bank to another.
Auto sweep-in fixed deposits come with a wide range of benefits. Here are some advantages you must know about:
No Need to Liquidate the Entire FD
You do not need to break your investment to access additional funds during emergencies and lose out on the interest income in the process.
Higher FD Rates
You can earn higher interest rates compared to a savings account, on the excess funds.
Flexibility
You get to choose the deposit period, maturity, payment terms, and the balance to be maintained in your linked accounts depending on the bank.
Option to Link Multiple Accounts
You can link multiple bank accounts to the FD to maximise your returns and maintain liquidity.
No Additional Charges
This facility does not come with any additional charges or penalties for premature withdrawals.
It is a common misconception that the sweep-in facility on FDs and flexi deposits are the same. See the table to know how they differ:
Parameter |
Flexi Deposit Scheme |
Sweep-in FD |
Deposit Terms |
Requires manual transfer of funds from the savings to the linked FD account |
Excess funds above a set threshold are transferred automatically from the linked bank account to the FD account |
Withdrawal Flexibility |
Some banks may charge a small penalty for premature withdrawal of a flexi deposit before maturity |
Early withdrawal does not incur penalties, but you may lose out on the interest earned on the withdrawn amount |
Nature of the Investment |
It is a separate product |
It is an added facility offered on savings and current accounts |
Requirements to Open a New FD |
You need to book an FD each time you transfer funds from your bank account |
No need to open an FD each time, as the excess funds are automatically swept into the existing account |
Frequently Asked Questions
Is the sweep-in account beneficial?
The auto sweep-in facility lets you address your short-term fund requirements easily while allowing you to earn returns on the investment.
What is the risk of a sweep-in account?
The main risk associated with a sweep-in account is that you tend to earn lower returns when you make fund withdrawals frequently.
Can I lose money in a sweep-in account?
No, you do not lose money on your fixed deposit. However, remember that the FD amount keeps reducing whenever you make withdrawals.
Can I withdraw money from a sweep FD?
Yes, a sweep-in FD allows you to withdraw funds anytime without incurring any charges.
Is it safe to use the sweep-in facility on fixed deposits?
The safety and credibility of this facility depends on the issuer. It is essential to assess the issuer’s credit rating and monitor your FD regularly.
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