More News : If you regularly maintain a high balance in your savings account, activating your bank’s Auto Sweep Facility could help you earn significantly higher interest on surplus funds. Under this feature, any amount exceeding a pre-set limit in your savings account is automatically transferred into a Fixed Deposit (FD), allowing you to earn FD-equivalent interest on the excess balance while continuing to use your account normally.
What is the Auto Sweep Facility?
The Auto Sweep Facility is a banking service that links your savings or current account with a fixed deposit. Once your account balance exceeds a threshold set by you or the bank, the surplus amount is automatically transferred into an FD. If funds are required later, the amount can generally be transferred back to the savings account, subject to the bank’s terms and conditions.
How Does It Work?
For example, if you set an Auto Sweep limit of ₹20,000 and your savings account balance increases to ₹80,000, the first ₹20,000 remains in your savings account, while the remaining ₹60,000 is automatically converted into a fixed deposit. The surplus amount then earns interest at the applicable FD rate, while the base amount continues to earn the regular savings account interest.
Higher Interest Potential
Most banks offer around 2.5% to 3% annual interest on savings accounts, while fixed deposit rates for regular customers are often between 6.5% and 7% or more, depending on the bank and tenure. As a result, the Auto Sweep Facility can substantially increase the interest earned on surplus funds.
However, claims such as “three times more interest” should be viewed as illustrative rather than guaranteed, as actual returns depend on the difference between a bank’s savings account and FD interest rates.
Key Benefits
- Earn FD-equivalent interest on surplus savings.
- Automatic transfer of excess funds into fixed deposits.
- No need to manually create FDs every time your balance increases.
- Easy access to funds, subject to your bank’s Auto Sweep rules.
- Helps maximize returns while maintaining liquidity.
How to Activate It
Customers can usually activate the Auto Sweep Facility by visiting their bank branch or, if available, through internet or mobile banking. The bank will specify the minimum balance threshold, FD tenure, and other applicable conditions.
Note: The Auto Sweep Facility, eligibility criteria, interest rates, withdrawal rules, and minimum balance requirements vary from bank to bank. Customers should check the specific terms and conditions with their bank before opting for the service.
