Auto Sweep Bank Account – Introduction, Benefits, Terms. Understanding What Is An Autosweep Bank Account. Every one of us has a saving account in one or the other bank. The bank offers us interest on our savings bank a/c at around 4% per annum. This rate of Interest is very low and gives us very less income in the name of interest. Even blocking our money in such saving bank scheme seems to be a waste. So, usually people go for fixed deposits.
Fixed deposits are good if you are sure that you will not require money for a certain period of time. Sometimes you may not need money for a year or two but at times, you may require money urgently. But your money is blocked in this fixed deposit. How to overcome the above situation is a question. We need good returns without a lock in period.
Well friends, let me tell you there is a Facility called AUTOSWEEP A/C which solves this problem of ours. now check more details about “Auto Sweep Bank Account” from below
Auto Sweep Bank Account
What is an auto sweep a/c??
Auto sweep account is the one which merges saving bank A/c. with the Fixed Deposits. An auto sweep account consists of a threshold amount, above which the money gets converted into fixed deposit. Example: Mr. Raheja has Rs. 55,000/- in his SBI Bank Account. Mr. Raheja has opted for Auto sweep facility and the threshold limit by SBI is say Rs. 25,000/-. Now, the bank will transfer (55,000 -25,000 = 30,000/-) i.e. Rs. 30,000/- to Fixed deposit. Now, Mr. Raheja has withdrawn Rs. 10,000/- from his bank. Even in this case the FD will continue and Rs. 10,000/- will be honored from saving bank account balance. Suppose if Mr. Raheja now withdraws Rs. 25,000 from bank a/c than bank will honor his request by transferring Rs. 15,000/- from his Saving Bank A/c and transferring Rs. 10,000/- from Fixed Deposit alongwith interest accrued till date.
Why should you switch to Auto Sweep A/c??
Saving bank Account generally gives you interest of 4% per annum. Fixed deposit gives you interest of 6.5-8% per annum but then you may need to break FD in case of some urgency. Auto sweep A/c. on the other hand merges the benefits of saving bank A/c and fixed deposits. It offers you interest at the higher rate of 6.5-8%. Example: Mr. Rahim has Rs. 5,00,000/- in his saving A/c. for his marriage which he is not converting to fixed deposits. Now one year has elapsed but he couldn’t find any girl and earned interest of Rs. 20,000/- only. If he would have opted for auto sweep A/c., then interest might have been doubled @ 8%.
Which banks Offer Auto Sweep A/c facility??
Almost all banks provide this facility
- SBI bank in the name of Multi Option Deposit Scheme
- HDFC Bank in the name of Sweep in facility
- ICICI Bank in the name of AUTOSWEEP
- Bank of India in the name of BOI SAVING PLUS SCHEME
- OBC Bank in the name of FLEXI FIXED DEPOSIT SCHEME
- Allahabad bank in the name of FLEXI-FIX DEPOSIT
Some Important Terms:
SWEEP IN: When the Amount exceeds the threshold limit and moves to fixed deposit, it is called a Sweep in.
THRESHOLD LIMIT: The limit above which the money gets converted into fixed deposit is termed as Threshold limit.
REVERSE SWEEP: Sometimes amount from the fixed deposit moves back to saving account in order to honor Withdrawals it is called as Reverse Sweep.