Are you busy and not having enough time to effectively utilize the idle money in the savings bank account?. Then, this article would provide you a useful tips to utilize the auto-sweep facility available in most of the banks to maximize the returns for your idle money. This article explains about the auto-sweep facility and pros and cons of that feature. This would be perfect for the person with busy schedule and not able use the fund sitting in the savings bank account. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.
What is auto-sweep facility in savings bank account?
Auto sweep facility combines the benefit of savings bank account and fixed deposit account. It is normal case where most of the people have huge amount in the savings bank account for the long time which earns meagerly 4% p.a. The intention or benefit of this facility is to attain the high degree of liquidity in your savings bank account with maximum returns.
This facility has the threshold amount of certain limit, if you have the excess of the threshold amount in the account, this facility automatically move the excess amount into the fixed deposit. It earns the highest interest rates then in the savings bank account. Auto Sweep is the common term used to mention this scheme, but different banks has different scheme which you can read out in the next section.
How it works?
If you have a savings bank account and the cut-off amount for the auto sweep is set as Rs.25000, when you have excess amount in the account, it will be moved to the fixed deposit with the higher interest rates. The feature of this facility is different from each bank and cut-off amount also will be different. There may be minimum sweep amount will be specified in the some banks. The following are the steps explaining how it works:
- You have savings or current account.
- This account must be enabled with the auto sweep facility. Note that the name of the scheme is different for each bank. The following are the list of scheme names for few banks:
- Axis Bank – Encash 24
- Axis Bank – Encash 24
- Union Bank – Union Flexi Deposit
- HDFC Bank – Super Saver Facility
- Bank of India – BOI Savings Plus Scheme
- Oriental Bank of Commerce – Flexi Fixed Deposit Scheme
- State Bank of India – Multi Option Deposit Scheme
- Allahabad Bank – Flexi-fix Deposit
- Bank of Maharashtra – Mixie Deposit Scheme
- Corporation Bank – Money Flex
- United Bank of India – United Bonanza Savings Scheme
- IDBI Bank – Sweep-in Savings Account
- Each bank has their won threshold amount to enable the auto sweep facility.
- The tenure of the fixed deposit booked would be different from each bank. For example, SBI allows the fixed deposit from 1-5 years where as AXIS bank allows maximum of 181 days.
- If the savings account lacks of the minimum balance after withdrawing the money or lack of money to clear any cheques, the fixed deposit will be broken and move the fund to savings bank.
Advantages of auto sweep facility
- You need not worry on idle cash on the savings bank account.
- Amount in savings bank will be effectively utilized to earn more income.
- Banks automatically park the amount to high interest rates.
- This would be very good option for those who do very less transaction in the savings bank and have the excess amount.
Dis Advantages of auto sweep facility
- There may be service charges applicable to the transactions. Before opening the auto sweep facility, read the instructions carefully.
- This facility will not be suitable for those who do lot of transactions in the savings account.
- When you have multiple FDs created, the order of breaking the FDs might affect the returns. Few banks first break the low earning FDs then will move to the high interest rates.
Auto Sweep facility is must have for the account holders who have the excess amount in the savings bank account for long time. It is observed that huge number of professionals who are salaried get their monthly salary on their savings bank account. But, they left un-utilized for the months which kept idle. This facility will benefit you lot to earn higher interest rates. If you have any doubts, please post it in the comments section.
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