Banks offer numerous facilities to their customers to ensure that handling finances is much easier. One such smart feature is the auto sweep facility. It helps you earn higher interest on extra money in your account without losing easy access to it. Instead of letting money sit in your savings account with low interest, banks transfer the extra balance after a threshold into a fixed deposit (FD).
This way, you enjoy both savings account flexibility as well as FD interest. Let’s understand in detail what is auto sweep facility, how it works, and which banks provide it.
What is the Auto Sweep Facility?
The auto sweep facility is a special feature that banks provide to help you link your bank accounts with a fixed deposit. So, there is a fixed limit, after which the extra money in your account automatically gets transferred to a fixed deposit.
Suppose the limit set is ₹50,000. Now, when the balance in your account crosses this limit, the extra money is moved to a fixed deposit. With this FD, you earn higher interest than a normal savings account.
If, later, your account balance goes low, money is “swept in” from the FD back to your account. With this, your money keeps earning better returns while staying available when you need it.
How does an Auto-Sweep Facility work?
Here’s how the auto sweet facility works step by step:
Step 1: You choose a minimum balance limit.
Step 2: Any money above that limit is swept out and goes into a fixed deposit.
Step 3: The swept money earns FD interest rates.
Step 4: If your account balance is below the limit, the bank would sweep in money back from the FD into your account.
Major Banks Offering Auto Sweep in India
Many banks in India provide this feature. Some of the popular ones are:
- State Bank of India (SBI)
- Axis Bank
- HDFC Bank
- Punjab National Bank (PNB)
- ICICI Bank
- IDFC First Bank
- Kotak Mahindra Bank
- Bank of Baroda
- Bank of India
How to activate the Auto Sweep Facility?
Activating the sweep facility is very simple. You can do it in different ways. You can either directly ask the bank to enable the auto sweep facility or visit the bank’s online portal to enable it yourself.
Key Benefits of the Auto Sweep Facility
The auto sweep facility provides you with many advantages:
- You earn more interest as that extra money in your account earns FD interest.
- You have easy access and you can still use your money anytime you need it.
- There is no need to create or break FDs manually.
- You use your money better as the idle balance never gets wasted.
- You can choose the balance limit as per your financial needs.
Conclusion
The auto sweep facility provided by banks is a very useful option, especially for people who keep extra money in their accounts. It would combine the best of savings and FD with easy access and higher returns.
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