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Savings Account & Auto-Sweep Facility: How Does it Work?

Posted on Tuesday, June 27th, 2023 | By Neha Jain

Although a simple banking product, a savings bank account is an excellent way to practice financial discipline. It keeps your hard-earned money safe, and even lets it grow, while you go about your daily life. When you need to transact, you can withdraw or transfer funds through online or offline methods.

While you do earn simple interest on savings accounts, there is an even better way to grow the money lying in your savings bank account. An auto-sweep facility helps you earn a higher-than-usual interest on your funds while allowing you to access those in an emergency.

IndusInd Bank offers a ‘smart sweep feature’ through its Indus Multiplier Max savings bank account. This is a fixed deposit (FD)-linked savings account, offering dual benefits – the flexibility of a savings account coupled with higher returns on fixed deposits.

Also Read: What is a Savings Account? How Does it Work?

How Does an Auto-Sweep Facility Work?

The Auto Sweep Facility has two features. The Sweep Out feature allows your bank to transfer a sum exceeding a pre-decided limit into a fixed deposit account. These deposits offer a higher interest rate than the savings bank account, thus allowing accountholders to grow their funds faster.

Additionally, no premature closure penalty is applicable to this account. Meanwhile, the Sweep In feature allows your bank to move the swept funds from the linked FD to your savings account to meet any balance shortfalls. This enables you to have higher fund flexibility and accessibility whilst earning interest whenever the swept funds remain in the FD for a specific time.

Auto-Sweep Facility vs Regular Savings Account: Key Differences

Features	Auto Sweep Facility	Regular Savings Account
Purpose	Combines the benefits of a savings account and fixed deposit to maximize returns on surplus funds.	Primarily designed for daily banking transactions and easy access to funds.
Interest Earnings	Swept funds earns interest rates that are almost similar to fixed deposits.	Entire balance earns the standard savings account interest rate.
Treatment of Surplus Funds	Surplus funds are automatically transferred to a fixed deposit.	Excess funds remain in the savings account unless manually invested elsewhere.
Flexibility	Offers both earning potential and easy access to funds.	Offers easy access but limited earning potential on excess balances.
Convenience	Automatically manages excess funds for better interest yield.	Simple account management with no investment automation.

Benefits of Auto Sweep with IndusInd Bank

When you opt for the Auto Sweep facility with IndusInd Bank’s Savings Account, you’re not just growing your money, but also unlocking a host of thoughtful features designed to make your banking experience smarter and more rewarding.

1. Low Minimum Balance Requirement

Account holders can start a savings bank account with a minimum balance of just Rs. 10,000. However, it is always advisable to check with your respective banks to learn more about their applicable terms and conditions.

2. Auto Sweep Feature

With the smart sweep feature, a savings account balance exceeding the predetermined limit is automatically converted into a fixed deposit in multiples of Rs. 1,000. Additionally, whenever your account balance falls below the minimum balance, it is automatically filled up by breaking a part of your linked fixed deposit.

Auto-Sweep Interest Rates & How Returns Are Calculated

You earn interest on the amount that has been swept from your savings account to your linked fixed deposit. The banks consider multiple factors while calculating the interest, including the amount of time the swept amount stayed in the FD. Let’s understand this with an example:

Particulars	Amount (₹)	Interest Rate (p.a.)	Annual Interest Earned (₹)
Savings Account Balance (up to threshold)	50,000	4%	2,000
Auto Sweep FD Balance (surplus funds)	50,000	6%	3,000
Blended Return			5,000

Note: The above figures are for illustrative purposes only.

Also Read: What Factors Does a Bank Consider When Fixing FD Interest Rates?

Make Your Funds Work for You with an Auto-Sweep Facility

IndusInd Bank’s auto-sweep facility allows you to transfer excess funds into a fixed deposit, earn higher interest, and grow your money faster. Further, if your account falls short of funds, the fixed deposit is conveniently liquidated to meet your expenses – no premature closure penalty to be paid!

FAQs

Who should opt for a savings account with an Auto-Sweep Facility?

A savings account with an Auto-Sweep Facility is ideal for individuals who regularly maintain surplus funds in their account and want to earn higher returns without sacrificing liquidity. It is particularly suitable for salaried professionals, freelancers, business owners, retirees and investors who often keep large balances parked in their savings accounts.

Can salary account holders benefit from an Auto-Sweep Facility?

Yes, even salary account holders can avail the Auto Sweep Facility.