A Sweep-In Fixed Deposit (FD) is a special facility that links your savings or current account to an FD. It allows excess funds in your account to be transferred automatically into a fixed deposit, earning you higher returns without locking your money away entirely. This innovative feature ensures liquidity while maximizing interest on surplus funds.
Key Features of Sweep-In FD
Account Linking:
A savings or current account is linked to a sweep-in FD account.
Both accounts must be with the same bank.
Minimum Investment:
Surplus funds are transferred to the FD in multiples of ₹1,000, though some banks allow smaller increments.
Tenure:
Sweep-In FDs typically range from 1 to 5 years, depending on the bank's terms.
Interest Rates:
These deposits earn the same interest rate as standard FDs, higher than savings accounts.
Withdrawal Flexibility:
Withdrawals are allowed without breaking the entire FD. Only the required amount is removed, ensuring continued earnings on the remaining deposit.
Eligibility:
Investors with a minimum FD of ₹25,000 or a premium account balance (₹25,000–₹1,00,000) are eligible.
No Penalties or Fees:
Withdrawing swept-in funds incurs no penalties.
How Does the Sweep-In Facility Work?
When your account balance exceeds a set threshold, the surplus is automatically transferred to an FD.
For example:
If you set a limit of ₹30,000 and your account holds ₹50,000, ₹20,000 will be transferred to a sweep-in FD.
If you later need ₹10,000, it will be withdrawn from the FD without breaking the entire deposit.
Advantages of Sweep-In FD
Higher Returns: Earn better interest rates on surplus funds compared to regular savings accounts.
Liquidity: Access funds from the FD without breaking it entirely.
Convenience: Automates surplus fund management, transferring excess amounts to FDs seamlessly.
Flexibility:
Multiple accounts can be linked.
Threshold limits and tenure can be customized.
No Hidden Costs: Unlike overdrafts, sweep-in accounts don’t incur extra charges for withdrawals.
How to Avail Sweep-In FD
You can activate the sweep-in facility online via your bank's internet banking portal or offline by visiting your bank branch.
Steps:
Link your savings or current account to the FD.
Set a balance threshold.
Choose the FD tenure.
What is a Flexi Fixed Deposit?
A Flexi Fixed Deposit is a hybrid deposit product combining an FD’s high returns with a savings account’s liquidity. Unlike sweep-in FDs, Flexi FDs require manual deposits and withdrawals.
Difference Between Sweep-In FD and Flexi FD
Feature | Sweep-In FD | Flexi FD |
Mechanism | Automated transfer of surplus funds | Manual deposits and withdrawals |
Purpose | Maximize earnings from idle funds | Offer flexibility for partial withdrawals |
Penalty for Withdrawal | None | May vary by bank |
Account Linking | Savings/current account linked to FD | Standalone deposit scheme |
FAQs
1. What is a sweep-out facility? A sweep-out facility automatically transfers funds from your FD to your savings account to meet shortfalls.
2. Can I link multiple accounts to a sweep-in FD? Yes, you can link multiple accounts to a sweep-in FD for added convenience.
3. Are sweep-in accounts safe? Yes, they are as secure as regular FDs and protected under deposit insurance up to ₹5 lakhs.
4. Can I use an existing FD for a sweep-in facility? Typically, sweep-in facilities require new FDs, but it varies by bank.
Conclusion
Sweep-In FDs are an excellent choice for those looking to make the most of their surplus funds without sacrificing liquidity. They combine the high returns of fixed deposits with the convenience of instant access to funds, making them a flexible and practical investment solution.
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