• Mon. Jun 24th, 2024

Exploring Auto Sweep Facility and the Basics of Savings Accounts


Nov 23, 2023

The auto sweep facility helps individuals automatically save surplus funds that help them plan and secure their future. This facility requires both a savings account and a fixed deposit account. The surplus money is automatically sent to a fixed deposit (FD) account as the funds in your savings account exceed a certain amount. An FD account earns you additional interest on your balance. The amount earned is more than if you left your surplus funds in your savings account. Therefore, the auto sweep facility is useful for safe and practical investing.

Also, it is important to learn all the features of your savings account. It allows you to manage your finances effectively and efficiently.

What is a Savings Account?

You may be unfamiliar with common banking terms if you are a young professional. A savings account is one of these terms. A savings account is one of the most popular forms of bank accounts in India. It is a safe place for individuals to store their money. With mobile and online banking, you can easily receive and transfer funds from your savings account. With your debit card, you can withdraw funds from your account instantly. A popular feature of savings accounts is that they earn owners interest from the balance. If the auto-sweep facility seems a bit complicated, wise savings account management still allows your wealth to grow. Note the interest rate pay-outs on a savings account can differ from bank to bank.
Features of Savings Accounts:

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· Can offer interest on the balance amount.

· Often, senior citizens receive an additional interest rate of 0.5% above normal rates.

· Comes with a Debit Card, Chequebook, and other features that allow individuals to access funds easily.

· Easily accessible with net and mobile banking, making UPI, NEFT, IMPS, or RTGS transactions easy and convenient.
· Individuals can decide when they want the interest rate payout: monthly, quarterly, etc.

· The amount that can be deposited into a savings account is usually unlimited.

· Exclusive offers and savings on a range of debit cards and savings accounts.

· There might be a minimum balance amount that you must adhere to.

Things You Should Know

You can set the upper limit for your savings account. You decide the amount, and as soon as the threshold is crossed, the surplus funds are transferred to a flexi deposit. The flexibility of the auto sweep facility makes it accessible for earning individuals in all categories.

Individuals can still access the liquidity of their surplus funds. If you require funds that have been sent to your fixed deposit account, it is not a problem. The auto-sweep facility also has a reverse sweep-in facility. Individuals can transfer funds from their FD account to their savings account.  In addition, there is no premature withdrawal penalty. However, doing so means that individuals will not earn any FD interest rate on the amount they transfer. Hence, it is advisable not to make frequent transactions when you have the auto sweep facility active. 

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Salaried individuals should set low Fixed Deposit lock-in amounts. It offers flexibility when transferring funds between the two accounts without disrupting the auto sweep facility.

Knowing what is a savings account is important if you want to make the most of the auto sweep facility. It also helps individuals manage their finances better and understand the range of their bank’s services. Make sure that you carefully plan your finances before starting an auto-sweep facility.

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