Auto-Sweep facility in a Savings Account: Benefits, features & activation

Most of us hold a Savings Account in a bank. There are better ways to save or invest your money than earning 1% to 2% interest on the money held in a Savings Bank Account. If you have a substantial amount lying in your bank account, consider investing it in a Fixed Deposit, which is a no-brainer and the safest investment to earn a few extra bucks.

And guess what? You don't even have to check every time you have extra money in your bank account. You could just give a standing instruction to your bank or apply to avail of an auto-sweep facility.

Is that something you haven't heard about before? Then don't worry; this blog is all about understanding the auto sweep facility, its meaning, features and benefits.

What is Auto Sweep Facility? 

The Auto-sweep facility is a simple feature that transfers excess funds from a savings account into a fixed deposit account. It connects your savings account to a fixed deposit account, allowing you to earn a higher return on the surplus funds available in your savings account.

All you have to do is link your savings and fixed deposit accounts and establish a monetary limit. Once your savings account balance goes beyond the set limit, the auto sweep facility kicks in. 

It moves the surplus amount to the fixed deposit account, helping your surplus funds grow faster than the interest earned in your savings account. It's a smart way to maximise your returns without any extra effort on your part. Axis Bank offers a unique auto sweep facility called the Auto Fixed Deposit (AFD).

Top features of Auto Sweep Facility in Savings Account

• Boost your earnings with a higher interest rate than a regular savings account.
• Enjoy the benefits of a hybrid account that combines features of both fixed deposit and savings account.
• Automatically moves extra funds beyond a set limit from your savings to a fixed deposit.
• Easily transfer the surplus back to your savings when needed.
• Utilize the auto sweep feature to create a separate fund for emergencies.
• Flexibility to auto-renew the deposit. For instance, you can renew FD up to a maximum of 5 years from a minimum of 6 month.

How does an Auto-Sweep Facility work? 

Let's try to understand how the auto sweep in savings account works with the help of an example.

Consider the example of Mr A, attempting to avail of an auto sweep in Savings Account. Mr A's Savings Account balance is Rs 45,000. Let's assume there is a minimum balance requirement of Rs 10,000 in his bank account, and he has set a threshold limit of Rs 25,000.

In this situation, the savings account auto sweep facility transfers Rs 20,000 to a Fixed Deposit account in multiples of Rs 5000. The amount in the FD earns a higher return than the amount stored in the savings bank account.

We encounter a similar situation in a reverse auto sweep. If you wish to withdraw more than what is available in your savings account, it is automatically debited from your FD.

Following the example above, if Mr A wants to withdraw Rs 30,000 from his Savings Account, the additional Rs 5,000 will be withdrawn from the amount invested in the Fixed Deposit account.

How to activate the Savings Account Auto Sweep Facility?

There are two ways to apply for the auto fixed deposit facility through Axis Bank: online and offline. Here's how you can do it online:

Step 1: Log in to your mobile banking application on the Axis Bank App.

Step 2: Click on the "Apply Now" option available on the side panel of your app.

Step 3: Now, click on the "Auto Fixed Deposit" option. This will take you to the terms and conditions page. You can read the terms and conditions and agree to them.

Step 4: On the next page, set your limit for "Auto transfer amount above." Enter your threshold limit, tenure of your FD, and the frequency of auto transfer. Once you enter all the details, click on continue.

Step 5: In the last step, you will receive an OTP to activate the auto-fixed deposit facility. Enter the OTP, and you are good to go. Your auto-sweep facility is now active.

To apply for the auto-sweep facility offline, simply download the Auto Fixed Deposit application form and submit it at your nearest Axis Bank branch.

Top benefits of Auto Sweep Facility

 

Here are some advantages of using the auto-sweep facility:

Enhanced liquidity

This feature provides you with both liquidity and the opportunity to earn a higher interest rate on your funds. Imagine you have an EMI payment due but need more funds in your Savings Account. Your bank will automatically transfer the previously invested funds to your account, ensuring you can make timely repayments.

Flexible account linking

You can choose the tenure, maturity period, and threshold amount for your Fixed Deposit (FD). This feature allows you to link multiple accounts to the same FD, guaranteeing that you never experience a liquidity shortage.

Build a separate corpus

The auto-sweep facility enables you to build a distinct corpus that you can tap into during emergencies. It ensures that you won't need to take out loans to address unexpected financial challenges, providing you with a financial safety net.

Also Read: Complete guide on how to open a Savings Account in 5 easy steps

Conclusion

The auto-sweep facility is a valuable tool for effectively managing the balance between your savings and investments. This feature offers you peace of mind concerning your extra funds. The auto-sweep facility is a beneficial banking feature that helps you grow your funds while maintaining liquidity and flexibility. So, instead of letting your excess funds remain idle in your savings account, consider incorporating the auto-sweep facility to grow your corpus.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.