You have a Savings Account where your hard-earned money sits idle, earning minimal interest. You know that the money could work harder for you, but you are not quite sure how to make that happen. One day, you hear about an amazing feature called the Auto Sweep Facility. This feature automatically transfers funds from your Savings Account to a linked Fixed Deposit account when your account balance surpasses a certain threshold. Let's discuss this feature in detail while detailing its benefits and the process to open a Savings Account auto sweep.
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
Things to keep in mind when opting for the Auto Sweep Facility
- Interest on the swept amount is typically calculated at Fixed Deposit rates, which are higher than a Savings Account. Check your bank’s rates, as they may vary and affect your returns significantly.
- Banks create short-term Fixed Deposits for the auto sweep, often ranging from 1 to 12 months. Shorter tenures mean quicker withdrawals but check if the tenure aligns with your savings goals for optimal benefit.
- Withdrawals before the Fixed Deposit matures may incur penalties, reducing the interest earned. Familiarise yourself with your bank’s terms regarding penalties to avoid unexpected charges if you need early access to funds.
- The auto sweep facility requires activation, which can often be done online or at your bank branch. Follow the activation process carefully and understand how to deactivate it if your needs change.
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.
