Fixed Deposit Sweep-in - Comprehensive Guide

How Does the Sweep-in Facility Work? 

Certain banks allow you to open a savings account and link it to a fixed deposit, while other banks grant you access dependent on the number of overdrafts you have taken out. The latter method is preferable because it allows you to have an account without a minimum balance requirement, such as a savings or current account.

In the event that your account is underfunded, the bank will, at your request, transfer money from your fixed deposit into the account that is associated with it. Depending on the instructions provided to your bank, the amounts can vary from Rs. 1 to Rs. 1,000. Interest will be lost on the amount that is swept, not the entire deposit amount.   

What Are the Advantages of the Sweep-in Facility?

There are many advantages of this facility, below are some of them:

• Any individual who runs a small business and has a current account need not take an overdraft on the fixed deposit held by them, setting up a sweep account will be more beneficial for them.
• With this facility being available, you can now draw the exact amount you require and need, instead of like an overdraft where that is a stipulated amount to be draw which more often that not ends up being more than you need.
• You don't lose interest on the fixed deposit, you lose interest only on the amount drawn or swept.
• There are no additional fees or charges that need to be paid like in the case of overdraft facilities that are levied by banks.
• In addition, the interest received will be more than in a standard savings account. If you have money in a savings account, for instance, and it earns 4.8% annually, the same amount invested in a fixed deposit will yield nearly twice that amount.
• The interest earned as well, will be higher than a regular savings account. For example, if the money in a savings account earns you a rate of 4.8% per annum the same money swept into a fixed deposit will earn you almost double the 4.8% per annum.
• Many banks even offer you the facility to link multiple fixed deposits to your sweep account.

Is There Any Eligibility for a Sweep-in Account?

Yes, you have to open a fixed deposit of at least Rs. 25, 000, or alternatively you could open a premium account wherein the minimum balance on either a monthly or quarterly basis is in the range of Rs. 25, 000 - Rs. 1, 00, 000.

Is the Sweep-in Facility Different from a Flexi Deposit? 

Any extra money is automatically swept into a fixed deposit when using a sweep-in facility. You don't need to open a new fixed deposit for this purpose, and the amount can be any amount up to the threshold limit of Rs. 1. On the other hand, a Flexi Deposit necessitates that you manually schedule a fixed deposit and connect it to your current or savings account.

The Sweep In feature is a more practical and straightforward way to keep extra money in a place that pays you more interest than having to physically book it as with a Flexi deposit. With this facility, you only lose interest on the amount deducted from your Sweep In account; there are no fees, fines, or even charges for breaching the fixed deposit.