Advantages and disadvantages of auto-sweep facility
The auto-sweep facility is best suited for salaried people who cannot afford to maintain huge amounts in the FDs and simultaneously want their unused funds to earn a higher rate of interest.
One of the disadvantages in the auto sweep facility, that is, some banks prefer to maintain the FD for some period of time, say 1 year and 1 day. In such a case, premature withdrawal of the FD amount would levy a penalty.
Another disadvantage with the facility is that in traditional FDs, banks calculate compound interest whereas in auto-sweep facility they might calculate only simple interest.