The Auto Sweep Facility is a big game changer in conventional banking. By opting for this facility, you can combine your savings and fixed deposit (FD) accounts. This banking feature connects your savings account to your fixed deposit account, allowing you to earn higher interest rates on the additional funds in your savings accounts. This new feature increases the benefits of earning more interest with easy access to your idle funds.
What is an Auto Sweep Facility?
In the Auto Sweep Facility, you can establish a fixed limit for the balance amount in your savings account, and when the balance goes beyond this limit, the extra money is moved to a fixed deposit account. This fixed deposit account offers a higher interest rate and becomes more beneficial. In this banking feature, your savings account is combined with your fixed deposit account, which allows you to earn higher interest rates on the additional funds in your savings accounts. The feature of ‘Auto Sweep’ automatically transfers excess funds from a savings account to a fixed deposit account. You need to link your savings and fixed deposit accounts and establish a financial cap to your savings account.
Once the savings account balance goes over the set limit, the auto sweep feature will be activated. The surplus amount will be moved to the fixed deposit account. When the balance in your savings account goes below a set minimum amount, funds are automatically transferred from your fixed deposit account to your savings account to keep it above the required limit. It helps in faster growth of average interest on surplus funds compared to savings accounts; at the same time, it also offers liquidity to account holders.
Read: How to Download the SBI Home Loan Provisional Interest Certificate?
Advantages of the Auto Sweep Facility.
The advantage of an auto-sweep facility lies in its convenience and effectiveness. Once your savings account balance exceeds the set limit, the extra money is promptly transferred to an FD account, which can earn a higher interest rate. This guarantees that your money will benefit you more and increase your profits without needing your involvement.
However, suppose the balance in your savings account goes below a certain level. In that case, the auto-swift function will transfer the necessary amount from your fixed deposit to your savings account to maintain liquidity and accessibility. The significant benefits of using the Auto Sweep facility are:
- Higher rate of interest: The Auto Sweep Facility of SBI increases your interest earnings by automatically converting excess funds into FDs, which provide much higher interest rates than regular savings accounts. This planned distribution guarantees that the excess funds in your savings account are constantly being utilised to produce the highest profits, ultimately enhancing your total earnings and financial security.
- No fees for withdrawing money: By using SBI’s Auto Sweep Facility in savings and FD accounts, you can easily access the funds transferred into FDs without any penalties or being locked in for long periods like traditional options. This facility allows you to access your funds anytime without paying fees or limitations. It improves your financial flexibility and provides ease of use.
- Flexibility: The Auto Sweep Facility in SBI provides unmatched flexibility in financial management. It is based on an automatic fund allocation mechanism. This feature automatically redirects extra money into FDs, maximizing fund usage to help you achieve your financial goals effectively without any manual guidance.
- Improved Wealth Management: This facility primarily benefits people with significant savings. Auto Sweep Facility is a fund management policy that increases returns on money that is not actively being used. It also allows quick access to funds when needed. This new feature allows you to effectively manage your long-term savings goals and immediate financial requirements, improving your overall financial wellness and happiness.
What is the use of the Auto Sweep Facility?
Initially, you must specify a cut-off point for your savings account. As soon as the balance in the savings account surpasses this specified limit, the additional funds will be moved to your fixed deposit account automatically. This process is known as sweep-in. Both of these accounts will earn profit from their interest.
However, this doesn’t mean you cannot withdraw the extra sum. Using this auto-swift facility, you have liquidity anytime, even if the funds have been transferred from a savings account to an FD account. Suppose you want money beyond the remaining balance in your savings account. You need not worry. The funds will be moved from your fixed deposit account to your savings account, and you can avail of that money from your savings account.
What is the process for enabling the Auto Sweep Facility in SBI Online?
The process of enabling the auto sweep feature at SBI is similar to that of most banks. Below, we have outlined the procedure for allowing the Automatic Sweep Facility at the State Bank of India, the biggest lending bank in India. The method to activate this facility online is as follows:
- Go to the official SBI online banking website. Share your online banking information, like username and password.
- Then, a captcha will appear, and you must enter the code.
- After you enter the Captcha, the one-time password (OTP) will be sent to your verified mobile number, and then you should enter that OTP.
- You will be redirected to the Deposit and Investment tab at the top of the page, and then you should select it.
- Then choose the ‘Deposit’ option.
- You will be taken to a new page with many options, and should select the ‘Auto Sweep Facility’ option.
- Once Again, you will be redirected to a new page that shows the bank account details, such as account number and address. Press the ‘Continue’ button.
- Pressing the ‘Continue’ button will send a high-security password to your verified mobile number. Enter the password into the specified box and press the ‘Confirm’ button.
- An interface will be shown on the screen. It requires entering auto sweep information as sweep frequency (monthly or weekly), commencement date, the minimum limit for a savings account, and resulting balance.
When the balance in the savings account hits the specified limit, the auto-sweeping function will be activated. The final total is the amount that will be left in the savings account.
Conclusion
The auto-swift facility in banking is advantageous for account holders as it assists in increasing their funds while ensuring liquidity and flexibility. Instead of letting your extra money sit idle in a savings account, when the balance in the savings account hits the specified limit, the bank will activate the auto-sweeping function.
FAQs.
The interest rate can range from 0.5% to 3%. There is no penalty fee for early withdrawals with an automatic sweep FD.
It’s only beneficial if you have extra money after covering all your expenses at the end of the month. This means that you finish the month with a substantial amount of money in your bank account and rarely take out any money from the fixed deposit. Using the auto-sweep facility will result in higher returns if you possess it.