Savings Account Balance Sitting Idle? This Bank Feature Could Boost Your Interest
Keeping a large amount of money idle in a savings account may not be the best way to earn interest. An 'auto-sweep' facility can automatically move surplus funds into a linked fixed deposit (FD), helping you earn potentially higher interest while keeping the money accessible when needed.
The Rs 25,000 remains in your savings account for regular expenses, while the surplus earns FD interest.
The facility generally works in two ways:
Kotak Mahindra Bank calls its facility 'ActivMoney'. Similar options are also available with Axis Bank, Bank of India, IDFC FIRST Bank, Punjab National Bank and Bank of Baroda.
The eligibility, threshold, FD tenure and other conditions can differ by bank and account type.
If the same amount qualifies for an auto-sweep FD earning around 6%-6.5%, the interest could be approximately Rs 750-Rs 810 for three months.
These are only illustrative figures. Actual returns depend on the bank's applicable rate, FD tenure and account conditions.
This may work for transactions such as ATM withdrawals, UPI payments, online banking transactions or cheque payments. However, minimum withdrawal amounts and premature-withdrawal rules vary between banks.
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How Does Auto-Sweep Work?
Suppose you set your savings account threshold at Rs 25,000. If your balance reaches Rs 65,000, the bank may transfer the extra Rs 40,000 into an FD, depending on its rules.The Rs 25,000 remains in your savings account for regular expenses, while the surplus earns FD interest.
The facility generally works in two ways:
- Sweep-out: Excess money above the set limit moves into an FD.
- Sweep-in: When your savings balance falls short, the required amount can be brought back from the FD.
Which Banks Offer This Facility?
Several major banks offer auto-sweep-type facilities under different names. SBI offers 'Savings Plus (MODS)', HDFC Bank has 'Sweep-out FD/Money Maximizer', while ICICI Bank offers 'Money Multiplier/Flexi Deposit'.Kotak Mahindra Bank calls its facility 'ActivMoney'. Similar options are also available with Axis Bank, Bank of India, IDFC FIRST Bank, Punjab National Bank and Bank of Baroda.
The eligibility, threshold, FD tenure and other conditions can differ by bank and account type.
How Much More Interest Can You Earn?
Consider Rs 50,000 kept unused for three months. At a savings interest rate of around 2.5%-3% annually, the interest could be roughly Rs 310-Rs 375.You may also like
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If the same amount qualifies for an auto-sweep FD earning around 6%-6.5%, the interest could be approximately Rs 750-Rs 810 for three months.
These are only illustrative figures. Actual returns depend on the bank's applicable rate, FD tenure and account conditions.
What If You Suddenly Need the Money?
You generally do not need to manually break the FD. With a sweep-in facility, the bank can transfer the required amount from the linked deposit back into your savings account when there is insufficient balance.This may work for transactions such as ATM withdrawals, UPI payments, online banking transactions or cheque payments. However, minimum withdrawal amounts and premature-withdrawal rules vary between banks.
How to Activate Auto-Sweep?
Banks may allow customers to activate the facility through:- Net banking
- Mobile banking apps
- Branch visits
Things to Check Before Activating It
Auto-sweep can be useful, but the terms matter. Before enabling it, check your bank's latest rules regarding:- Minimum balance or threshold
- Sweep multiples
- FD interest rates and tenure
- Premature withdrawal rules
- Applicable charges
- Tax and TDS on FD interest
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