NEWS & ADVICE : FIXED DEPOSITS
Fetch higher interest rate on your savings account
By Neelima Shankar
Print    Email    RSS   

How does this facility work?

Some banks avoid publicising this facility in order to maintain a high Current Account Saving Account (CASA) ratio. A high CASA ratio helps in reducing the cost of deposits for the banks, thus increasing their net interest income.

Also, the auto-sweep facility is known by different names in different banks and therefore it is important for you to discuss it with your bank and activate it, if you want to.

The working of an auto-sweep facility is pretty simple

  • Firstly, decide on three things: the maximum amount you want to deposit in your savings account. This is known as the threshold limit.
  • Secondly, decide on the FD amount
  • Lastly, decide the tenure of the FD

Once these three things are decided, the remaining task is performed by technology which works according to your instructions.

Suppose you deposit an amount of Rs 30,000 in a flexi-deposit scheme on September 1, 2008. The minimum amount to be maintained in a savings account is Rs. 5000 and you fix the threshold limit at Rs. 10,000. The remaining 20,000 would be automatically transferred to the fixed deposit scheme and will earn you a higher rate of interest. You will be required to maintain a minimum balance of Rs. 5000 in your savings account.

Next year if you want to withdraw an amount of say Rs. 15000 from your account, you can withdraw only Rs 5000 from your savings account since your savings account has an amount of Rs. 10,000, out of which Rs. 5000 has to be maintained in the account as the minimum balance.

Therefore the rest of the amount (Rs. 10,000) is withdrawn from the FD. This is called Sweep-out or Reverse Sweep. The FD is now reduced to Rs. 10,000.


Page    | 123 |  
(Comments Posted : 1) Post Your Comments
1. I have an SB MOD account where I'm getting 9.25% for my saving account.

I would recommend you all to go for it.
AJ (Posted: Dec 16, 2011)
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Planning to invest in a bank FD? Think again
Things you should know while filing income...
Manage your FD in a better way
Things to know before retirement
Sweep in to Auto Sweep savings A/c


MEXING: CaℒL Giℛℒ In Hoshiarpur 09855660911...
Sakeela.CaℒL Giℛℒs In Kharar 0985566O911...
NANGAL: CaℒL Giℛℒ In Una 09855660911 Escoℛt...

NEWS THIS WEEK
Federal Bank launched V connect for its customers Feb 12, 2015
Andhra Bank on expansion mode Feb 11, 2015
Dena Bank earned a profit of 13%. Feb 9, 2015
Banks expected to cut down the rates Feb 5, 2015
RBI kept the rates unchanged Feb 4, 2015
News Archive