06 October, 2023
Understanding the Fixed Deposit Sweep-In Facility
Are you wondering about the Fixed Deposit Sweep-In Facility and how it can benefit you? Let's break it down in a simple and relatable way.
What Is the Fixed Deposit Sweep-In Facility?
The Fixed Deposit Sweep-In Facility is like a smart way to manage your money. It lets you connect your Fixed Deposits (FD) to your regular savings and current accounts. Why? Because it helps you earn more from your money.
How Does It Work?
Imagine you have some extra money in your savings account – more than what you need for your everyday expenses. This extra money can be automatically moved to your linked FD account under the Sweep-In Facility. No need for you to do anything; it all happens on its own!
Setting Your Limits
You can decide how much money stays in your regular account and how much goes into your FD. This depends on your needs – you can set your own limits.
When You Need Cash
Now, let's say you need some extra cash from your regular account, and there isn't enough. No worries! The Sweep-In Facility automatically moves the money back from your FD to your regular account. It's like magic!
Why You Need It
Why is this so cool? Well, nowadays, the interest rates in regular savings accounts are not so great. But FDs give you more interest. The problem is that FDs can tie up your money, and you might need cash quickly. So, what do you do? That's where the Sweep-In Facility comes in.
It gives you the best of both worlds – you get more interest like in an FD, and you can still use your money whenever you want, just like in your regular account.
To get started, you need to link your regular savings or current account with an FD account. Some important things to know:
Bank Account Linking: You can link your existing account or open a new one at your bank's branch.
Minimum Transfer: Most banks transfer money in multiples of Rs. 1,000. Some allow transfers below Rs. 1,000. Check with your bank for details.
FD Tenure: The linked FD usually has a minimum tenure of 1 year and can go up to 5 years.
Withdrawals: If you need to withdraw more money than what's in your regular account, the Sweep-In Facility can help with that too.
Interest: You earn interest on the money in your FD while it's there. The interest is automatically calculated and credited to your regular account when the money moves back.
Eligibility: Most banks require a minimum FD value of Rs. 20,000 to Rs. 25,000 to get started.
So, what's in it for you?
- You get better interest rates on your savings account balance.
- You have instant access to your money, just like in a regular account.
- You can link multiple FDs to your savings account if your bank allows it.
- You can choose the FD duration and set your own threshold limit.
- No extra charges or penalties for using this facility.
- Not the Same as Flexi-Deposits
By the way, Sweep-In FDs are not the same as Flexi-Deposits. Flexi-Deposits require manual deposits and withdrawals, but Sweep-In is automatic and more convenient.
How to Start
If this sounds good to you, check if your bank offers the Sweep-In Facility. Here's how to get started:
- Open a new FD if you don't have one.
- Choose the sweep-in option when opening the FD.
- Link your regular account with the FD.
- Set your threshold for transferring money between accounts.
That's it! You're all set to make your money work smarter for you with the Fixed Deposit Sweep-In Facility.