Automatic Sweep Facility: Everything You Need To Know

Most banks now offer the facility of auto sweep with a minimum balance on savings accounts, which has become popular amongst account holders. While regular savings accounts offer interest, it is often below the inflation rates. 

However, the auto sweep account interest rate is higher than the savings account rates, allowing you to earn higher returns. It also enables you to practice disciplined investing, all through your idle funds. 

To learn the meaning of a savings account with an auto sweep facility, how it works and its benefits, read on.   

What is an Auto Sweep Facility?

It is a combination of a savings account and a fixed deposit (FD), allowing you to enjoy the benefits offered by both. The following are some of its features-

• Under the automatic sweep facility, your savings account is linked with your FD account
• By opting for this facility, you instruct the bank to transfer funds over a pre-determined limit into an FD account 
• This allows you to earn better interest on the extra funds than a regular savings account

How Does the Automatic Sweep Facility Work?

To make an informed decision, it is crucial to know how this feature on savings accounts functions. Here is an overview of how an automatic sweep facility works-

• When you opt for an auto-sweep account, the bank will ask you to specify a threshold limit
• Whenever your account balance crosses this threshold limit, the excess amount will be automatically transferred into a fixed account 
• This process is known as sweep-in and the interest you will earn on this will be different, generally higher, than the savings account
• Opting for the facility of auto sweep in a savings account doesn’t mean that you can’t access the amount converted into an FD 
• You enjoy the same level of liquidity as with a regular savings account
• If you request an amount over the funds in your savings account, the bank will transfer the same from the FD created through the sweep-in facility

Also Read: Salary Account VS. Savings Account

How to Activate Auto Sweep Facility?

It is a smart way to maximise your savings but the process varies depending on your bank. Here are the general steps to activate the automatic sweep facility-

• Visit the official portal of the bank and log in to your net banking account
• Click on the ‘Deposit’ option and select the ‘Auto Sweep Facility’
• Select the applicable account number and proceed ahead
• Enter the high-security password received on your registered mobile number
• Provide auto sweep details, including seep cycle, threshold amount, start date and more
• Click on the ‘Submit’ button to send your request 
• You will get a confirmation about the activation of the auto-sweep facility

Auto Sweep Facility Banks List

Many financial institutions in India offer this feature on savings accounts. Here are some of the leading banks allowing you to opt for the auto-sweep facility:

• Bank of India
• State Bank of India 
• HDFC Bank 
• ICICI Bank 
• Kotak Mahindra Bank
• Bank of Baroda
• IDFC First Bank

You can visit your bank’s branch or contact customer support to know if the facility is offered for your savings account. You can also visit the bank’s website and login to your account.

Also Read: Best Banks For Savings Accounts In India

Pros and Cons of the Auto Sweep Facility

It offers a convenient way to make the most of your idle funds while maintaining liquidity. Here are some of the benefits of availing of the facility of auto sweep in a savings account:

• An auto sweep savings account allows you to earn higher returns compared to the regular savings account while enabling you to enjoy the same ease of access to funds 
• This type of account also offers flexibility to choose the threshold amount as well as the tenure and maturity period of the fixed deposit

On the other hand, opting for this facility also has certain disadvantages. These include:

• Some banks levy additional charges if you opt for this facility
• You need to pay penalty charges if you make a premature withdrawal from your FD account

The money lying in an auto sweep account helps you create a corpus for emergency expenses or long-term goals. However, if you ever fall short on cash for your lifestyle needs, you can also rely on Fibe’s quick and hassle-free Instant Cash Loan. 

You can get up to ₹5 lakhs and enjoy instant disbursal with affordable interest rates and flexible tenures going up to 36 months. Download the Personal Loan App or log in to our website to secure a loan with an easy and simple application process.

FAQs on Automatic Sweep Facility

Is auto sweep good or bad?

The auto sweep in a savings account is ideal if you often have a large balance in your account that you don’t need to access frequently. 

What is the minimum balance for an auto-sweep account?

The minimum balance in an auto-sweep savings account depends on the bank and your account type. 

Which is better, FD or auto sweep?

For individuals who have a huge lump-sum amount to invest for a fixed tenure, a regular FD is the better option for investment. However, the automatic sweep facility is better for those who regularly have a high balance and want to retain the liquidity of a savings account. 

Can I withdraw money from the auto-sweep account?

Yes, an auto sweep account offers the same level of liquidity as a regular savings account, which means you can easily withdraw the excess money whenever you need.

Do sweep accounts pay interest?

Yes, the automatic sweep facility offers interest on the savings account as well as the FD account created after the sweep-in. Moreover, the auto sweep account interest rate is generally higher than that of a regular savings account.